Struggling Saab is set to follow in fellow Swedish car maker Volvo's footsteps, heading for Chinese ownership under a planned 100 million euro (88 million pound) purchase by Pang Da Automobile Trade Co <601258.SS> and Zhejiang Youngman Lotus Automobile Co.

Saab has not produced cars for months and has lurched from one cash crisis to another to find itself under court protection from creditors to stop bankruptcy filings, a process which was in danger of collapsing before the new Chinese agreement.

After the better part of seven months of agony for the company, we have come to a point where we can proudly say that we made it, said Victor Muller, chief executive of current Saab owner Swedish Automobile.

He spoke after Swedish Automobile announced a memorandum of understanding under which the two Chinese companies -- auto maker Youngman and dealer Pang Da -- are to pay 100 million euros to buy Saab.

He said eventual investments would be double the 245 million euros promised under an earlier deal with the Chinese companies.

If successful, it would be the second Chinese purchase of a Swedish car company in just over a year after Geely bought Volvo in August 2010 from Ford . Swedish Automobile, then called Spyker, itself rescued Saab from closure by former owner General Motors in early 2010.

Muller has orchestrated a string of deals over the last few months to keep Saab afloat after it had to close its production line. The latest news came after a source told Reuters a new Chinese deal was close.

In a reminder that other deals and promises of funding for Saab have fallen through, Swedish Automobile said the new agreement was valid to November 15 and that final terms were still being worked on, including long-term financing.

Muller, 52, a former mergers and acquisitions lawyer who made his fortune from Dutch fashion brand McGregor before revamping loss-making luxury sports car maker Spyker, is a fanatical collector of classic automobiles.

His passion for cars has cost him dearly in this case.

He told a conference call Swedish Automobile, in which he is the biggest shareholder, would lose roughly 70 million euros from its Saab investment, if the latest deal went ahead, having paid about 54 million euros for Saab and later investing 120 million euros more.

Muller, an ebullient character known for his unbounded optimism, who has spent much of this year travelling the world, tapping a network of friends and potential investors, said he was now confident in the future of the 60-year-old brand.

I have had no life in the past two years... My job was to save the company. I think I achieved it.

We can be comfortable that the business plan that the company had made will now be executed and that the funding will be provided, he added.

Muller said he would catch up on his sleep once the deal was secured. First, I'm going to sleep a lot. No Saab, but sleep.

Swedish Automobile's shares leapt 28 percent after the news but are still down 70 percent this year. Just last week it rejected a full takeover of the car maker by the two Chinese firms, but had continued negotiations.

By 1:32 p.m. British time Swedish Automobile shares were up 15.4 percent.

CREDITOR PROTECTION

Muller said the two Chinese firms planned to keep making cars in Sweden as well as start production in China.

Any new equity deal from the two Chinese investors would require approval from the Chinese government and the outcome could be far from certain because Beijing follows a strict and price-sensitive policy when it comes to overseas acquisitions.

The European Investment Bank and General Motors also, as creditors to Saab, have to give their approval to an agreement.

Muller said he had only had a brief talk with General Motors about the new Chinese deal.

If we play our cards right, I think that they will be convinced that this is of benefit to all parties, including themselves, he said of GM, the EIB and creditors.

The prospect of a new Chinese deal persuaded court-appointed administrator Guy Lofalk to withdraw a request to terminate a creditor protection scheme, which the court had been due to rule on Friday. A decision against Saab could have led to a flood of bankruptcy petitions.

A meeting with creditors is due on Monday.

($1 = 0.707 Euros)

(Additional Reporting by Patrick Lannin and Sara Webb; Editing by David Holmes and Helen Massy-Beresford)