Saab reprieved with cash and keys in China

Dutch auto minnow Spyker revealed on Tuesday a deal with Chinese carmaker Hawtai to pump 150 million euros ($221 million dollars) into stricken Saab, hoping this will be a key to sales in China Spyker described the partnership as a "mid-term" solution to its liquidity crisis. Under the deal, Spyker which had rescued Saab, is to receive 120 million euros in return for shares and 30 million euros in the form of a convertible loan from the Hawtai Motor group. The announcement comes a day after Spyker said it had secured a short-term cash injection of 30 million euros to restart production within a week. "Saab is now well financed, it has secured its short and mid-term financing," Spyker head Victor Muller told reporters on the phone from Beijing. "That puts the liquidity crunch that the company went through in the month of April to bed," he added. Saab announced on April 6 this year it was stopping production "until further notice" as suppliers halted deliveries due to unpaid bills. The stop marked the latest of a series of obstacles Spyker, an auto industry minnow, had been faced with since acquiring Saab from US auto giant General Motors for 400 million dollars in early 2010. The Dutch firm said in a statement on Tuesday that its partnership with Hawtai, a Beijing-based automotive company founded in 2000, would see the Chinese firm take "a maximum equity stake of 29.9 percent in Spyker on a fully diluted basis." The company said: "The remaining 30 million euro will be in the form of a convertible loan agreement with a six-month maturity, an interest rate of seven percent per annum and a conversion price of 4.88 euros per share." The Hawtai deal was subject to approval and conditions including the consent of Chinese government agencies, the European Investment Bank and the Swedish National Debt office, Spyker said. Muller said the deal meant Hawtai would start producing Saabs locally for the Chinese market. "Production in China is for China, and production in Trollheattan (in western Sweden) is for the rest of the world. There is no cannibalism here in any way, shape, or form," he said, adding "the Saab 9-3 would be the first car that would be eligible for such local production (in China) ... sometime in 2013. "There is a tremendous benefit in sharing technologies," Muller said, describing the production partnership as a joint venture and recalling China's Geely had benefited from its purchase of Swedish carmaker Volvo in August 2010. But he stressed Spyker's deal with Hawtai for Saab was a partnership, not an acquisition. He also said the partnership would allow Saab to take advantage of Hawtai's distribution network, which could pave the way for the import in China of Saabs made in Sweden, boosting sales. In the statement, Hawtai's vice president Richard Zhang, said "the partnership with the iconic Saab brand will give us access to innovative technologies and an international network which would have taken us decades to build." "On the other hand, we have a very strong Chinese manufacturing and distribution infrastructure which we will make available to our new partner Saab automobile," Zhang said. Hawtai has the capacity to produce 350,000 vehicles, 300,000 engines and 450,000 automatic transmissions per year, Spyker said. In Sweden, Enterprise Minister Maud Olofsson, who previously said Saab would not receive any help from the state, applauded the partnership. "I've said the whole time that for it to work in the long term there had to be private interests ready to invest the money," she said.