Geely's Volvo Cars wants bigger EIB loan

Swedish carmaker Volvo Cars, owned by Chinese group Geely Automobile, wants a bigger European Investment Bank loan than previously planned, €600 million ($758 million) rather than 500m. Volvo Cars also said on Tuesday it had restarted talks with Sweden about a government guarantee for the EIB loans which will be used to develop environmentally friendly vehicles.

The company was granted an initial €200mo loan in March 2009 but its takeover by Geely put talks about a guarantee on hold ahead of the deal's completion.

"Volvo Cars has resumed the talks with the Swedish National Debt Office regarding having the government guarantee these EIB loans," spokesman Per-Ake Froberg said.

"Time has gone by, so we are now talking about a different timeframe. Instead of 2009 to 2012, this now concerns projects running from 2010 to 2013 and that effects the sum we are borrowing."

Zhejiang Geely, parent of Hong Kong-listed Geely completed the purchase of Volvo Cars from US parent Ford Motor Co earlier this month, paying $1.3 billion in cash and issuing Ford a $200m note.

Geely said earlier this year it remained open to a possible EIB loan though it had all financing in place for the takeover of the Swedish carmaker, the biggest overseas purchase by a Chinese company in the automotive sector.

Carmakers across Europe called for loans backed by governments to help them develop less-polluting vehicles as the global financial crisis left many of them fighting for survival in the face of weaker demand and mounting development costs.