Saab has signed a memorandum of understanding (MoU) with Chinese companies Pang Da and Youngman for the sale and purchase of 100% shares of Saab Automobile and Saab GB for €100 million (£88m).
The agreement is subject to a definitive share purchase between Swedish Automobile, Pang Da and Youngman which also needs to be approved by shareholders, relevant authorities and certain other parties.
The £88m will be paid in instalments and Saab said an important consideration it to enter into the transaction is the commitment of Pang Da and Youngman to provide long term funding for the business.
Swedish Automobile would have actually made a profit from the the €100m deal as it bought Saab from General Motors for €53m. However, the company has invested €120m during it’s less than two years of ownership which amounts to a €70m loss overall.
The MoU is valid until November 15 which will give Saab more time to reorganise the business.
Saab’s administrator Guy Lofalk had applied for the business to exit reorganisation and be declared bankrupt but has now applied to withdraw his application.
This latest lifeline with Saab's Chinese investors is the latest in a twisting saga to save the company from bankruptcy.
Saab terminated its provisional agreement with Youngman and Pang Da for a 53.9% stake in the Swedish brand for £213 million on October 24. The Chinese investors also made a full bid to buy 100% of Saab but their first offer was rejected.
Saab had secured a second round of funding four days ago in the form of £44.6 million from US private equity group North Street Capital to help the business continue as it restructures. This offer has now been revoked in light of recent developments.
The Swedish brand won approval on September 22 to go into bankruptcy protection in order to restructure its business.
Saab GB has said it’s still “business as usual” in the UK. Dealers have access to new and used car stock and the business has launched marketing campaigns offering free servicing deals on both new and used cars to help boost confidence.
There’s still no estimated date for when production will restart, but Saab GB will continue to operate the business in the UK as normal and has sufficient funding in place to meet all creditor obligations and will continue to pay all employees, dealers and suppliers.
Saab is offering UK customers two years’ free servicing on all approved used Saabs to attract more business into showrooms.