Saab rescuer Pangda starts China regulatory talks

China's largest listed car distributor Pangda Automobile Trade Co Ltd has started talks with Chinese regulators to get approval to invest in and rescue Swedish carmaker Saab.

Saab owner Spyker Cars entered into a partnership deal worth up to €110 million ($155 million) with Pangda last week to stave off the collapse of Saab, but the deal is contingent on Chinese regulatory clearance.

A previous deal Spyker entered into with China's Hawtai Motor Group fell through earlier this month due to problems in getting Chinese government approval for an overseas investment.

Dutch-listed Spyker said on Monday Pangda had started procedural discussions with Chinese authorities, including the National Development and Reform Commission (NDRC).

"The initial procedure discussions we have had with the NDRC were done in good spirit, and all parties have a good understanding of the process," Pangda Chief Executive Pang Qinghua said in a statement.

Spyker shares jumped 7.6 pe rcent at the opening before easing back later in the morning. They were up 1.2 per cent at 0914 GMT to outperform a negative Amsterdam smallcap index.

Some industry observers have noted, however, that the Pangda investment could face some of the same problems as the Hawtai deal as it requires Chinese government approval.

Although China's Ministry of Commerce is the main regulatory body that examines and approves cross-border M&A, Cabinet approval is needed for certain big deals.

Some smaller deals instead need the approval of the NDRC, the country's top economic planning agency. That's the case for natural resources deals worth more than $30mn and deals requiring more than $10 million in foreign exchange.

As part of the deal, Pangda aims to set up a manufacturing venture with Spyker and a partner in China this year as part of a plan to start making Saabs in China within two years.

It is not yet known which third party Pangda intends to work with, but if it is a state automaker, the deal will need approval from the State-owned Assets Supervision and Administration Commission.

Spyker CEO Victor Muller said he was confident that Pangda would get the approvals needed to formalise the deal.

Saab production has been halted for a month and a half after it failed to pay suppliers, but Spyker, which will be renamed Swedish Automobile, said it received an advance payment of 30 million euros from Pangda last Tuesday.

It hopes to restart production by the end of this week, or a couple of days after that at the latest.