Geely’s acquisition of Volvo is expected to be finished in the third quarter of 2010, but the capital sources and structure of it remain unknown, and Volvo’s Beijing factory has not got approval yet from the local government..

Geely’s chairman Li Shufu explained Geely had acquired 100 percent stake in Volvo cars for $1.8 billion, including 1.6 billion in cash and a 200 million note, plus the additional $900 billion in working capital, which totals $2.7 billion. Li Shufu said half of the $2.7 billion comes from overseas, and the other half comes from China, of which Geely accounts for 51 percent.

The sources of Geely revealed that Bank of China limited, London Branch sponsored the bank consortium to provide loans for the deal. Geely itself paid for $700-800 million. Moreover, the financing platform of a provincial government will also participate in the funding.

However, the company did not reveal the specific joint financing party and the number of the loans. A source of the Beijing Automotive Works (BAW) said Geely was supposed to set up a Volvo factory in Beijing and seek Beijing government’s financial and policy support, but the senior government officials there thought differently, considering Beijing should mainly support one automobile enterprise, namely, the BAW.

Geely is currently striving for the investment of a subsidiary company of the Daqing SASAC (the State-owned Assets Supervision and Administration Commission) of the Helongjiang province.

It is generally believed that the so-called joint financing party is closely connected with China’ future Volvo factory, and whoever it is, the real support will be the local government.



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