M&M said to be buying stake in Swedish Co

Sports utility vehicle market leader, Mahindra & Mahindra is reportedly planning to takeover National Electric Vehicle Sweden AB (NEVS), the holding company that purchased assets of Saab Automobile two years ago, according to documents filed in a local Swedish court.

NEVS, which ran into financial difficulties, signed a term sheet with M&M two weeks ago to begin intense negotiations.

The Mumbai-based company is one of the two companies that have evinced interest in NEVS. The other company is believed to be of Chinese-origin.

In a document filed in the court by one of NEVS creditors --a British consultant--Mahindra & Mahindra is named as the automaker about to pick up a stake in the Swedish company, said a report from Dow Jones.

The M&M stock was trading with a gain of 0.15% at Rs 1,268.5 on the Bombay Stock Exchange as against its yesterday's close of Rs 1,266.6.

M&M declined to comment on the deal but didnot deny the possibility of picking up a stake in the Swedish company.

"The company wishes to clarify that it examines/pursues various opportunities in different areas, from time to time on a continuing basis and it is not practical to comment upon every opportunity at every stage. Given the policy of the company of not commenting on speculative news/reports, we will not be able to comment on the same", the company had said in a statement sent to the stock exchanges.

The term sheet that NEVS signed with the interested party stipulates the form for further negotiations, commercial terms for an expected final deal, as well as funding to be paid by the OEM, both through a direct investment in NEVS and during the continuation of the negotiation phase until the deal is closed, NEVS said.

Last week, NEVS petitioned a local Swedish court to extend its period of creditor protection, granted earlier this year, saying that talks with potential investors were close to completion.

The Swedish company, which is owned by National Modern Energy Holdings, an Chinese-Japanese energy company having its headquarters in Hong Kong, filed for bankruptcy in August this year.

If a positive decision is given by the board of directors, the OEM player has agreed to provide bridge loans to NEVS with Euro 5 million per month to cover the running costs for a continued organisation until the negotiations are concluded, NEVS added.

NEVS, which makes cars running on electric motors and internal combustion engines, has a licensing agreement with Saab AB allowing it to use the Saab brand name for its future vehicles. NEVS restarted production of the Saab 9-3 sedan on Sweden's west coast late last year and had plans to build an electric car in China starting this year.