STOCKHOLM (AP) -- A small, privately owned Chinese automaker on Tuesday saved Sweden's Saab Automobile from imminent collapse through an agreement to provide $223 million (euro150 million) in funds for the ailing brand.
Saab's owner Spyker Cars said Hawtai Motor Group will take an initial 30 percent stake in Spyker in the deal which also includes joint ventures on manufacturing, technology and distribution.
The agreement is the latest in a line of efforts by Saab to raise capital, but the first that would provide enough funds to keep the carmaker afloat midterm. The automaker's production has been at a standstill since April 6 due to a lack of working capital, but on Monday it said it had secured short-term loans of $88 million (euro59.1 million) and aims to restart production within a week.
Shares in Spyker, which bought Saab out of liquidation from General Motors Corp. in January 2010, rose 16 percent to euro4.92 in Amsterdam on the news.
The deal is subject to approval from Chinese government agencies, the European Investment Bank and the Swedish National Debt Office, Spyker said.
Spyker CEO Victor Muller said he expects the approval from Chinese authorities in 6-12 weeks and does not anticipate any difficulties with the EIB clearance.
As a part of the deal with Hawtai, the Chinese company will invest euro120 million for a 29.9 percent equity stake in Spyker and euro30 million in a convertible loan with six months maturity.
The agreement means Sweden's two big car makers, both previously owned by U.S. companies, are now in Chinese hands. Last year Ford Motor Co. sold Volvo to China's Geely for $1.5 billion.
Saab, known for its aerodynamic sedans, struggled during the 10 years it was fully controlled by GM. Spyker has said it expects the carmaker to become profitable in 2012 and aims to ramp up production to about 100,000 cars a year.
So far, however, it has failed to meet targets. In 2010 it sold just under 32,000 Saabs, below its initial goal of 45,000, and Muller said the previous aim to sell 80,000 cars in 2011 is no longer feasible. The company sold 9,400 cars in the first quarter.
Muller on Tuesday said the deal with Hawtai means Saab has secured "the required midterm financing" and allows the company to "enter the Chinese car market and establish a technology partnership with a strong Chinese manufacturer."
He said Saab will initially export its 9-3, 9-4X and 9-5 models to China from the plant in Trollhattan, western Sweden, but in 2013 will start producing cars in China for the local market with the new 9-3 model.
Richard Zhang, vice president of Hawtai, said the deal with the "iconic" Saab brand will give his company access to innovative technologies and an international network which "would have taken us decades to build."
Hawtai, based in eastern China's Shandong province, is a relatively new automaker that parlayed a tie-up with Hyundai to build its market strength in China's fast-growing SUV segment. It also has licensed Italian engine technology and claims to have advanced know-how in clean diesel engines.
But Hawtai (pronounced whah-tie) lacks the scale of bigger domestic competitors such as Chery Automobile and Geely. It also has only recently begun making sedans.
Acquiring a ready-made platform and products for passenger cars is a key motivation for the investment in Saab, analysts say.
"Hawtai is taking a big risk there, but if Saab can enter the market quickly, maybe they can quickly turn the company around," said Yale Zhang, managing director of the independent consultancy AutoForesight in Shanghai.
"The first thing is to try to get access to the platform and technology and then to bring Saab directly to China, where it can find a large market," Zhang said.
However, Zhang Xin, an analyst with Shanghai Securities, cautioned that Saab isn't well-known in China and lacks a cache of big-name luxury brands.
"The Chinese don't know this brand - even less than Volvo. What is a famous and good brand for Chinese and foreigners is not the same. Chinese people like BMWs and Benz's," Zhang said.
"With growth in auto sales slowing significantly compared with recent years, competing in the mass, economy-segment of the market is not a very promising option, either," he added.
Spyker previously put forward plans to raise cash by selling its property to Russian businessman Vladimir Antonov and allowing him to become part-owner of Saab.
Last week, the Swedish Debt Office recommended the government allow Antonov to invest up to euro30 million for a 29.9 percent stake in Spyker. The plans were stalled by conditions put forward by the EIB, but Muller didn't rule out they could be resolved at a later stage.
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Elaine Kurtenbach reported from Shanghai. Toby Sterling in Amsterdam contributed to this report.
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