Loss-making Saab has veered toward collapse in recent weeks after running out of cash to pay its bills. Several suppliers stopped delivering parts, halting production at Saab's Trollhattan plant for most of last month.

Spyker Cars said on Tuesday Hawtai would invest 150 million euros ($222 million) in return for shares, providing funds that will enable Saab to pay overdue bills and resume production.

The move marks the second time a Chinese company has invested in a top Swedish car maker, and paves the way for the new Saab 9-3 model to be produced in China, starting in 2013.

Zhejiang Geely, the parent of Hong Kong-listed Geely Automobile Holdings (0175.HK), bought Saab's Swedish rival Volvo Cars from Ford Motor (F.N) last year for $1.3 billion in cash and a $200 million note issued to Ford.

The Hawtai deal is one of several pulled together to stave off collapse, including share issues, proposals to borrow more, and to sell and lease back Saab's real estate.

"Saab is now well financed. It has secured its short and mid-term financing needs," Chief Executive Victor Muller said.

"That puts the credit crunch that the company went through in April to bed."

At 1221 GMT Spyker shares were up 15.6 percent at 4.9 euros in a slightly lower Amsterdam market.

China's Hawtai makes SUV and passenger cars, and has production capacity for 300,000 clean diesel engines, 450,000 transmissions and 350,000 vehicles, according to its website.

It plans to build up the capacity to make 1 million vehicles, diesel engines and transmissions a year by 2015 and to become a top brand in China, where car ownership has soared.

Hawtai was founded in 2005 and is owned by entrepreneur Zhang Xiugen who was first listed on the Forbes 400 Richest Chinese list in 2005, when at the age of 44 he ranked 368th with an estimated net worth of $62 million.

Initially, Saabs produced in Sweden will start to be imported and distributed in China. Muller said production of the new Saab 9-3, due to start production in October 2012, will begin in China in 2013 for sale in the local Chinese market. Saabs produced in Sweden will be sold in Europe and elsewhere.

Hawtai vice president Richard Zhang said the companies would set up a joint venture with a sales target of 100,000 to 200,000 cars per year in China.

Spyker, which wants to boost sales and explore production in fast-growing emerging markets, including China and Russia, as well as Brazil and India, said on Tuesday that Hawtai will pay 120 million euros for a 29.9 percent stake in the firm, short of the threshold that would trigger a takeover offer.

It has agreed to pay a further 30 million euros in the form of a convertible loan with a six-month maturity and a conversion price of 4.88 euros per share.

Saab said the transactions are subject to approval from certain Chinese government agencies, the European Investment Bank, and the Swedish National Debt Office.

It is unclear whether the deal will gain Chinese government approval, a factor which contributed to the failure of China's Xinmao bid for Dutch cable firm Draka in January.

"The deal is not sealed yet. We have seen this with other takeovers or participations," said Patrick Beijersbergen of Dutch shareholders group VEB, adding it was too early to say if this deal would increase Saab's chances of survival.

"This is making things more complicated. Parties have to be sought that far, indicating that companies in western Europe are not willing to invest money. GM also did not want to do it," Beijersbergen said.

As part of the transaction, Muller's investment firm Tenaci Capital will also convert 42 million euros of its current loan to Spyker into shares at 4.88 euros per share to help reduce Spyker's interest burden.

GREAT LEAP FORWARD

Spyker bought the Swedish brand from General Motors (G.N) a year ago, rescuing it from closure, but has struggled to turn it around and produced only 31,700 Saabs last year. It had set a sales target of 80,000 vehicles for 2011, but last week said it would fail to meet that.

As Spyker faced a cash crisis, it scrambled to raise funds from its shareholders -- who include Muller, a Middle Eastern fund, and Gemini Investment Fund Ltd which is controlled by a Lithuanian businessman -- and new investors as well as banks.

Muller said it was unclear what the final shareholder structure would look like following the various proposed deals.

Spyker said on Monday it had agreed a 30 million euro convertible loan with Gemini and that it would draw 29.1 million euros on its loan from the European Investment Bank.

Vladimir Antonov, a Russian businessman and former shareholder in Spyker who was forced by GM to relinquish his stake, also proposed buying a 29.9 percent stake in Spyker for up to 30 million euros, and agreed to buy Saab's real estate and plant and lease it back to release cash.

Those deals have been held up after the EIB imposed terms Saab did not agree with. The EIB is also still to decide whether Antonov can become a shareholder of Spyker-Saab again.

He has said he has cleared his name and Sweden's Debt Office, which has guaranteed the EIB loan, has approved Antonov's return.