Troubled Swedish car maker Saab Automobile AB edged closer to bankruptcy after it said it had terminated rescue funding agreements with Chinese auto makers Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co., though the three companies remained in talks.
Saab is restructuring its operations under creditor protection and is trying to avoid being closed, after the administrator of the restructuring process on Friday moved to have the company thrown out of receivership and declared insolvent. The talks between Saab and the Chinese auto makers appear to offer the chance of one or both of the Chinese companies acquiring Saab.
Separately, Zhejiang Geely Holding Group Co., which purchased Volvo Cars last year and has had talks with troubled Saab, has no interest in acquiring a second Swedish car brand, its chairman said.
Geely representatives met Saab executives several weeks ago to explore the possibility of investing in Saab. But Geely Chairman Li Shufu said that even though some "outside advisers" recommended Geely try to combine the two Swedish auto brands, he concluded that Saab was too financially troubled for Geely to step in.
"We have no interest in Saab—absolutely no interest," Mr. Li told The Wall Street Journal in an interview, noting that his estimate was that it would take as much as $1.7 billion to properly restructure Saab into a viable brand.
According to Swedish news agency TT, Victor Muller, chief executive of Saab parent Swedish Automobile NV, has confirmed that the two Chinese companies have offered to pay 200 million kronor ($30.5 million) for all of Saab.
A Saab spokeswoman said that talks are continuing in Stockholm with representatives from the three companies. Last Friday, Guy Lofalk, the administrator in charge of Saab's restructuring, filed an application to end the process, citing the Swedish car maker's insufficient funds.
Under the now-terminated agreement with Youngman and Pang Da, the two were to take a 54% stake for €245 million ($340 million) pending approval from Swedish and Chinese authorities.
Cash-starved Saab needs new funds to pay wages. The Swedish company has until Thursday to have its say on the administrators' request to end the restructuring process. The district court will decide on the request a day later.
Mr. Li said that Volvo and Saab have a "similar, almost identical" brand identity and go after similar consumers. That would make it almost impossible to differentiate the two brands using one set of technology, he said.
Under the potential deal recommended, Geely's Volvo unit would have looked at proving Saab funds as well as technology. That would allow Volvo to spread the cost of developing new technology, but Mr. Li said a Saab turnaround would likely be too difficult.
Saab is also "too established a brand" to change its brand positioning quickly, Mr. Li said. Mr. Li's clarification comes despite "a degree of interest" a senior Geely executive said the Chinese auto maker harbored for Saab.
Swedish Automobile said Thursday it secured about $10 million in short-term funding for Saab from U.S. private-equity firm North Street Capital LP in exchange for issuing about two million new shares.
But despite this new possible influx of funding, the Saab administrator's motion last week to throw in the towel on Saab's restructuring "gives an indication that [Saab's] business at the moment is hanging on by a thread," said consulting firm IHS Global Insight in a recent research note.