SAAB, THE embattled Swedish carmaker, said yesterday that its erstwhile Chinese suitors had offered to buy it outright, potentially pulling it back from the brink of bankruptcy.

Just hours short of a court ruling that could have lifted its bankruptcy protection, Saab announced a deal with China’s Pang Da and Youngman under which they would buy all of the Swedish carmaker for €100 million.

The memorandum of understanding is tentative. Final agreement between the parties, Saab said, would be subject to the approval of relevant authorities, shareholders and “certain other parties”.

But the promise of a resolution prompted Guy Lofalk, the court-appointed administrator overseeing Saab’s protracted survival attemp, to withdraw his petition to abandon its reorganisation process.

“This must be taken into consideration because of the large numbers of jobs, Saab’s regional importance and the value destruction that would be the consequence of a bankruptcy,” Mr Lofalk said.

As recently as last week, Mr Lofalk had sought to end Saab’s protection from creditors because of doubts over its interim funding despite an announcement from Swedish Automobile (Swan), Saab’s Dutch owners, that it had secured $70 million of fresh equity from North Street Capital, a US private equity group, to keep the business afloat.

This came after a chaotic split with Pang Da, a car distributor, and Youngman, a car and bus producer, in which Saab’s chief accused the pair of failing “to confirm their commitment” to inject cash into the ailing Swedish car maker.

In June, Victor Muller, Swedish Automobile’s chief executive, had announced that the two companies had agreed to pay €245 million for a minority stake and would produce and distribute its cars in China.

Mr Muller’s relationship with the Chinese companies seemed back on track yesterday.

“It’s fantastic, Saab’s future is now secure,” Mr Muller said.

“The period of uncertainty has come to an end. We can pay our creditors and restart production,” he said.

Saab, which employs some 3,600 people, has been tottering towards collapse since March.

Assembly lines at its Trolhättan plant, north of Gothenburg, ground to a halt when suppliers stopped deliveries over unpaid bills.

A clutch of trade unions filed bankruptcy motions because of overdue salaries.

Mr Muller said yesteday it “was way too early to say” when production would resume.

In the meantime, he added, Pang Da and Youngman have committed to providing sufficient funds to get the process rolling.

“They have very, very deep pockets,” the chief executive of Swedish Automobile said.

The memorandum of understanding is valid until November 15th – providing Saab remains under court protection in the interim.

– (Copyright The Financial Times Limited 2011)