Troubled Swedish carmaker Saab said Monday it had hammered out details of a deal to secure last-ditch rescue funding by handing majority control to two Chinese companies, amid a new production halt.
Saab, Chinese distributor Pang Da Automobile and car manufacturer Zhejiang Youngman Lotus Automobile "signed a non-binding memorandum of understanding (including) an equity participation in the total aggregate amount of about 245 million euros ($352 million)," Saab's Dutch owner Spyker said in a statement.
Monday's announcement came nearly a month after Saab first said Pang Da had agreed to buy up to 45 million euros worth of Saabs for redistribution in China, and to buy a 24-percent stake in Spyker.
On Monday, Spyker said Youngman had also now agreed to go in as a 29.9-percent owner, investing 136 million euros, or 4.19 euros a share.
The news sent Spyker's share price soaring more than 27 percent to 3.20 euros a share on the Amsterdam stock exchange shortly before closing Monday.
The deal, which still requires regulatory approval from a number of authorities, would place basically all of Sweden's auto industry in Chinese hands, after Swedish brand Volvo was bought by Chinese Geely from Ford last year.
Saab and Spyker chief executive Victor Muller said he was thrilled by the deal.
"Both Pang Da and Youngman have demonstrated a similar entrepreneurial mindset as we have which we feel will be instrumental to establish Saab's presence in China," he said in the statement.
It remained unclear however if the deal would be approved quickly enough to rescue Saab, which was forced last week to halt production at its main plant in Trollhaettan in southwestern Sweden due to a lack of components, just two weeks after it resumed making cars following a seven-week hiatus.
Production will stay shut down at least until the end of this week, company spokeswoman Gunilla Gustavs told AFP, adding it was too soon to say when the assembly line would begin moving again.
She insisted the new halt was due to "hiccups" experienced by suppliers as they ramp their production back up after Saab's long stop in April and May.
Svenaake Berglie, the head of Swedish supplier umbrella organisation FKG, rejected that explanation.
"There is one single reason (for the production stop), and that is that Saab has not paid its supplier bills going back several months," he told AFP, adding the carmaker owed its suppliers "at least 400 to 500 million kronor," or around 44-55 million euros, $63-79 million.
Berglie said the deal with the Chinese companies was "of course a good thing in the long term," but cautioned it would likely take several months before going through.
"This is nothing that will save them in the short term ... and they need to cover their short-term cash problems, or they won't survive," he said.
Gustavs refused to comment on speculation Saab was headed towards bankruptcy, instead stressing that the multifaceted Chinese agreement announced Monday was "a big deal for Saab."
"It is a great sign of confidence in Saab's future, the value of our brand, especially on the Chinese market," she told AFP.
In May, Spyker and Pang Da had also spoken vaguely of a 50-50 distribution joint venture and a manufacturing joint venture that would include a third party.
Monday's announcement fleshed out the details of the deal, saying Youngman and Saab each would hold 45 percent of the manufacturing joint venture, while Pang Da would hold a 10 percent share.
For the distribution joint venture, Youngman and Saab would each hold 33 percent, while Pang Da would hold 34 percent, the Spyker statement said.
Saab, which employs 3,800 people, was rescued at the last minute in early 2010 when tiny Dutch company Spyker bought it for 400 million dollars from US auto giant General Motors.
After initial optimistic statements and production forecasts, Spyker and Saab have recently been scrambling to pull together enough cash to keep production going.
Saab is for instance attempting to renegotiate a rescue loan from the European Investment Bank to allow it to sell off real estate and lease it back, and is awaiting approval for controversial Russian businessman Vladimir Antonov to be allowed in as a large investor.
Muller on Monday insisted the latest Chinese agreement was "a step that significantly strengthens Saab's financial position and would secure the mid and long term financing of Saab Automobile."