Saab Turns to U.S. Investor, With Short-Term Loan From China Doubtful

Saab Automobile, fearing a loan from its Chinese investors will not come through in time to keep its restructuring bid alive, says it instead will accept a cash infusion from the U.S. private-equity firm North Street Capital valued at some $70 million.

Saab’s parent, Swedish Automobile, said last month Chinese auto maker Zhejiang Youngman Lotus Automobile and dealer-giant Pang da would provide a $70 million bridge loan to help finance its reorganization.

But today the Swedish auto maker expresses doubt it will receive the loan soon enough and decides to go with North Street, which last month bought boutique manufacturer Spyker Cars from Saab owner Victor Muller for $44 million.

Saab spokeswoman Michele Tinson tells WardsAuto scrapping the bridge loan from Youngman and Pang da does not change the status of a larger, $350.6 million investment expected from the Chinese partners.

The deal has been stuck in regulatory review for months.

The larger investment from the Chinese would ensure Saab’s long-term future.

It includes technology licensing to Youngman and a 3-way partnership including Pang da for building and selling a range of Saab vehicles in China.

The deal with North Street calls for the investor to receive 2.4 million shares of Saab at $4.19 per share, as well as provide a $60 million loan to the auto maker. Saab pledges assets to back the loan.

The North Street backing is called “necessary to continue the reorganization process of Saab Automobile,” the auto maker says in a statement.

The investment and loan are expected in full by Monday, or about a week ahead of a meeting by a Swedish court to rule whether the reorganization may continue.

Muller, a Dutch millionaire, bought Saab from General Motors in 2009 and saved the Swedish auto maker from liquidation.

However, as an independent auto maker, Saab has been mired in a financial crisis and its Trollhattan assembly plant has not produced any cars since April.