The deal with Chinese automaker that was supposed to rescue cash-starved Saab has collapsed, the Swedish maker revealed this morning, leaving it scrambling to find an alternative source of cash to pay suppliers and re-open its shuttered factory.
The collapse of the partnership appears to have been caused by Hawtai Automotive Group’s inability to get the necessary approval from Chinese bureaucrats who closely regulate the industry. A similar problem prevented the planned Chinese takeover, two years ago, of General Motors’ now-abandoned Hummer brand.
Strained for cash to pay its bills and unable to get approval from the European Investment Bank to sell its factory and other assets to a Russian banker, Saab announced last week it would sell a 29.9% stake to Hawtai. The Chinese also offered a short-term loan in a deal collectively valued at 150 million Euros, or $216 million.
The proposal would have also given Saab access to Hawtai production plants in China, potentially opening up an opportunity to penetrate the world’s largest automotive market. And, as TheDetroitBureau.com reported, Saab was considering ways to distribute Hawtai – or other Chinese – products in the U.S. (Click Here for more.)
But most importantly, Saab had hoped to use the cash to pay off suppliers who have been boycotting its Trollhattan assembly plant since March 29, putting a hold on production of its core 9-3 and 9-5 models. Saab Chairman Victor Muller told TheDetroitBureau.com he was hoping to re-open the factory next week.
Despite the setback, Saab is continuing to talk to Hawtai, which still hopes to win approval for the partnership.
Meanwhile, Saab’s Dutch parent Spyker Cars has reopened negotiations with the Chinese sport-utility vehicle maker Great Wall Motors.
Muller told TheDetroitBureau.com that Saab had originally been negotiating simultaneously with three different Chinese companies but opted for Hawtai because it offered “the best opportunity.”
Several other possible white knights remain in the wings, most notably Vladimir Antonov, the Russian businessman who had earlier offered to buy Saab’s factory and assets and then lease them back to the company. That deal failed to win approval of the European Investment Bank, however. But Antonov could directly invest in Saab instead.
The Russian, who contols a number of former East Bloc banks, had originally partnered with Muller in Spyker, which started out producing a line of low-volume, high-priced sports cars. Antonov was forced out in late 2009, however, because GM declined to sell Saab to Spyker if the Russian were involved in the deal.
Despite the latest setback, Muller has expressed hope for rescuing the deal or finding an alternative, noting, “I’m always optimistic. And this is no exception.”