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March 17, 2010

CHINA: More reports of Geely hurdles in Volvo buy

Recent suggestions that Geely may have inched closer to securing finance and completing the planned purchase of Volvo Cars from Ford have been thrown into further doubt by reports in China of the hurdles Geely still faces.

Recent suggestions that Geely may have inched closer to securing finance and completing the planned purchase of Volvo Cars from Ford have been thrown into further doubt by reports in China of the hurdles Geely still faces.

A report in the semi-official China Daily is seen by some analysts as especially significant.

“The two parties are yet to reach a definitive agreement due to unsolved obstacles and uncertainties,” China Daily quoted sources familiar with the matter as saying.

Delays to the timetable in recent months have been attributed to problems on tieing up the finances.

Geely was now in a relatively weak position compared to last year when Ford had cash flow problems and the two sides had not agreed on the technology transfer issue, the paper said.

After the deal, Geely would have to spend at least USD1.4bn to finance car development and marketing, and whether the Chinese company would be able to secure the necessary funds was a major issue, China Daily added.

Other reports say that sources inside Geely are maintaining that a deal is on track to be completed by the end of the second quarter.

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