Crisis-hit Saab won a reprieve today after its owner Spyker Cars signed an agreement with China's Hawtai Motor Group to form joint ventures on manufacturing, technology and distribution.
The agreement will provide 150 million euros ($222 million) funding for Saab, which has been forced to halt production because it cannot meet suppliers' bills.
Victor Muller, Spyker CEO and Saab Chairman, said: "Saab is now well financed. It has secured its short and mid-term financing needs. That puts the credit crunch that the company went through in April to bed."
Spyker said the deal is subject to consents from certain Chinese governmental agencies, the European Investment Bank and the Swedish National Debt Office.
Hawtai will invest 120 million euros for up to a maximum of a 29.9 percent equity stake in Spyker. The remaining 30 million euros will be in the form of a convertible loan with a six month maturity, an interest rate of 7 percent a year and a conversion price of 4.88 euros per share.
Muller said the deal will allow Saab to enter the Chinese car market with a strong local manufacturer. "We expect that Saab's unique brand values based on its aviation heritage, Scandinavian origins and innovation-driven character will do very well in the Chinese market," Muller said in a statement.
Richard Zhang, Vice President of Hawtai, said: "This is a great day for our relatively young company which was founded 10 years ago. 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."
Danger of collapse
Saab has veered towards collapse in recent weeks after running out of cash to pay its bills. Several suppliers stopped delivering parts, halting production at Saab's Trollhattan plant for most of last month.