Saab To China

As expected, troubled Saab has been thrown a lifeline by China’s Hawtai. Spyker announced today that its Swedish unit Saab has secured €150 million ($222.5 million) in funding from Hawtai. The Chinese company will be able to produce and sell Saab cars in China.

Hawtai will invest €120 million for a 29.9 percent stake in Spyker and provide a €30 million ($44.6 million) convertible loan to Saab. If the convert is exercised (which is pretty much a given – it matures in 6 months with a 7 percent interest rate) it converts at €4.88 a share, says the Wall Street Journal.

On Monday, Spyker entered into a 30 million euro ($44.6 million) convertible loan agreement with Gemini Investment Fund with a six month maturity. It is no coincidence that the terms are the same. Under the best of circumstances, the Gemini loan will be paid back with the Hawtai money.

Victor Muller received a serious haircut in the deal. His company Tenaci Capital will convert €42 million of its current €57 million loan to Spyker into share capital in Spyker at €4.88 per share.

According to Automobilwoche [sub], the new Saab 9-3 will be rolling off Hawtai lines as soon as 2013. The paper is not convinced of the deal. It says Hawtai has rescued Saab “for the time being.”

The transactions are subject to approval from certain Chinese government agencies, the European Investment Bank, and the Swedish National Debt Office.

About Hawtai

Hawtai and Huatai are one and the same. As explained by Carnewschina, “Huatai is the Chinese name, Hawtai the English-international name. Both names are used at the same time, just like Rongwei/Roewe, Qirui/Chery and so on. Before 2009 Huatai simply used Huatai as its international name.”

Rongcheng Hawtai Automobile Co Ltd was founded in 2000 and started making small SUV’s. The company is headquartered in Beijing, with manufacturing in Shandong Province and Inner Mongolia.

From 2002 until 2010 Hawtai/Huatai had a joint venture with Hyundai to make the Santa Fe and Terracan for the Chinese market. Later, Hawtai/Huatai produced the trucks under its own name, licensed by Hyundai. At the Beijing Auto Show 2010, Hawtai/Huatai showed the B11 and B21 sedans and the B35 SUV. The B11 went on sale in 12/2010. The B35 was renamed Baolige and will go on sale in June. The B21 will follow by the end of the year.

As Chinese carmakers go, Hawtai/Huatai is small. However, the company is owned by a sizable conglomerate with large expectations and deep pockets.

Hawtai/Huatai had shown intensive interest in exporting its cars. Saab branded cars could be the key to overcoming the many obstacles awaiting a Chinese exporter. Hawtai is heavily invested into clean diesel technology and is therefore very much interested in exporting to Europe.

From the perspective of a Chinese car company, a going European car company provides instant access to overseas markets, certified technology, brand recognition, respectability. Even damaged goods like Saab can become a treasure in Chinese hands.