Shanghai, December 1 (Gasgoo.com) China's homegrown automaker Geely is seeking at least $1 billion in loans from Chinese banks to finance its $1.8 billion bid to buy Ford Motor's Volvo unit, Reuters reported today, citing sources.
The banking insiders said that at least three major Chinese banks had agreed to extend loans to Zhejiang Geely Holding Group, who was picked in late October as the preferred bidder for Volvo. They banks include Bank of China, China Construction Bank and Export-Import Bank of China.
Export-Import Bank of China is a wholly state-owned policy lender, directly led by the State Council, China's cabinet. Bank of China is China's top foreign exchange lender. China Construction Bank is the country's No. 1 property lender.
On Nov. 19, Volvo's union leaders held first talks with Geely about how the Chinese automaker would back the Volvo deal, but were still waiting to see Geely's financing plans for the loss-making Swedish carmaker.
Ford and Geely have not disclosed a possible sale price for the Volvo deal yet but media reports had put it closer to $2 billion than the $6.45 billion Ford paid for Volvo in 1999, Reuters said.
Under a recent deal Geely reached with Ford on intellectual-property rights, Volvo will be able to use Ford's IPR to continue its existing business plans. After the purchase, Geely will own the IPR to Volvo's key technologies.
Geely strongly desires modern innovative technologies from the Swedish brand to upgrade its car models and tap the Chinese auto market, now surpassing the U.S. as the biggest in the world.
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