(Bloomberg) -- Zhejiang Geely Holding Group Co. agreed to purchase Manganese Bronze Holdings, rescuing the maker of London's iconic black taxis after the company entered administration last year.
Zhejiang Geely will pay 11.04 million pounds (12.8 million euros) to buy Manganese Bronze on a debt-free basis, the Chinese automaker said.
Geely Automobile Holdings, the Hong Kong-traded unit of Zhejiang Geely, already owned a 20 percent stake in Manganese following a 2006 joint-venture deal under which the UK company bought China-made components and body parts.
The purchase will help Zhejiang Geely, the closely held automaker headed by Li Shufu, speed up its expansion following the purchase of Volvo Cars in Sweden.
"We are determined to restore the fortunes of this totemic marque," Li said in a statement on Friday. "We are a long-term and committed investor and we believe the illustrious past of the London black cab can be matched by a successful and healthy future."
London has almost 23,000 licensed taxis -- those that can legally be hailed in the street. About 1,400 new ones are registered each year, according to Manganese Bronze, a market worth about 50 million pounds annually.
The company says it has supplied more than 100,000 of the taxis over the past five decades. Known as hackney cabs from their origin as horse-drawn coaches, their drivers must pass a four-year "Knowledge" test to demonstrate an encyclopedic understanding of 25,000 streets and 20,000 landmarks across the UK capital.
Regulations first developed by London's Public Carriage Office in 1906, and updated just a few times since, require cabs to have a 28-foot (8.5 meter) turning circle, 51 inches of internal headroom, separate passenger and driver compartments and a ramp for wheelchair access.
Manganese Bronze went into administration -- a form of creditor protection -- on Oct. 30 after the discovery of defects in steering boxes provided by a Chinese supplier. The steering problems led to a recall and production freeze, cutting off cash flow.
Prior to the administration, the automaker had 274 workers. It now employs 107 people. The stock was suspended Oct. 11. The latest crisis followed a succession of shocks, including a 4,400-car recall after engine fires in 12 TX4s, threatening to overwhelm a company that hasn't posted a profit since 2007. The business suffered a pretax loss of 3.6 million pounds in the first half of 2012 as revenue dropped 11 percent.
Manganese Bronze will continue to build its vehicles in Coventry, England, where it has assembled cars since 1948, Geely said on Friday.
Manganese Bronze's survival prospects were boosted on Nov. 15 when the company said it had solved the steering fault and that recalled cabs would be back on the road by mid-December.
Administrator Matthew Hammond, a partner at accountants PricewaterhouseCoopers in Birmingham, said at the time that some potential purchasers had come forward, lured by a global reach that last year saw Azerbaijan order 1,000 taxis to be built in China.
"I am delighted that Geely has successfully secured the future of the London taxi company, ensuring the continuing manufacture of a world famous, fully accessible and instantly recognizable vehicle synonymous with London," Boris Johnson, the city's mayor, said in a statement.