Struggling car maker Saab Automobile faced renewed uncertainty Thursday as the financing deal with China's Hawtai Motor Group fell apart, raising fresh concerns about the company's future.
Spyker Cars NV, which bought Saab from General Motors Corp. in 2010, said it was "forced to terminate" the $223 million (euro150 million) agreement with Hawtai since the Chinese company was not able to obtain all the necessary consents, including approvals from different shareholders.
The money from Hawtai was crucial to Spyker's plans to rescue cash-strapped Saab, which was forced to stop production at its plant in Trollhattan, Sweden, on April 6.
The exact reasons for the termination of the contract weren't clear, but analysts suggested it could be due to regulatory issues with Chinese authorities or China's BAIC, which has previously acquired the rights to some Saab technology.
However, Spyker said BAIC "does not have any problems" with its discussions with other Chinese partners."
Saab spokeswoman Gunilla Gustavs said the company continues to work toward securing capital and is in talks with other potential Chinese partners, but declined to give any names.
Before entering the agreement with Hawtai, Saab was also in discussions with Chinese companies BAIC, Great Wall Motors and Youngman.
IHS Automotive analyst Ian Fletcher said the cancellation of the deal "throws further doubt on the ongoing funding" of the company.
"Saab remains in dire need of an influx of cash from somewhere," he said. "If it does manage to gain funds to restart production, which has now been down for more than a month, it remains to be seen whether its relationship with its suppliers can be repaired."
Matts Carlsson, an automative analyst at Goteborg Management Institute, said he wasn't surprised that the hastened Hawtai deal fell through, but said he is "convinced" Saab can find another, better Chinese collaboration partner.
"If you look at a list with the 20 most interesting car companies in China, Hawtai is not on that list," he said. "So this could be positive."
However, he added the uncertainty surrounding the ownership is negative for consumer's confidence in the brand.
Spyker's shares fell 12.4 percent in afternoon-day trading in Amsterdam, to euro3.68 ($5.28).
Spyker and Hawtai had agreed that Hawtai would provide the funds for Saab in return for a 29.9 percent stake in Spyker.
In a brief statement, Hawtai confirmed the initial deal with Spyker had been terminated, but said it still hoped to find a solution.
"The current situation is complex and it was not possible to reach agreed documentation in the timeframe contemplated by the agreement," the company said.
Earlier this month, Saab secured short-term financing through a bank loan, but is still waiting for a drawdown on its loan from the European Investment Bank to be able to resume production.
It has previously also put forward plans to raise cash by selling its property to Russian businessman Vladimir Antonov and allowing him to become part-owner of Saab.
Those plans are still awaiting approval from the EIB and Spyker said discussions with the European bank about the conditions for an agreement continue. EIB declined to comment on the talks Thursday.
Malin Rising can be reached at http://twitter.com/malinrising