Stimulus-Funded Lithium Battery Maker to Sell Assets to Wanxiang

Yahoo Contributor Network

Times have changed. Less than three years ago, Massachusetts-based A123 Systems, Inc., was the recipient of a $249 million grant from the Department of Energy. This weekend, the company announced that it has sold "substantially all" of its assets to Wanxiang America Corporation, a subsidiary of China's largest automotive components manufacturer. Here are the details.

* According to A123 Systems, Wanxiang would acquire most of the assets for $256.6 million. This price tag buys Wanxiang A123's technology, products, consumer contracts and facilities in Michigan, Massachusetts and Missouri. It also buys the company's cathode powder manufacturing operations in China and its equity interest in Shanghai Advanced Traction Battery Systems Co.

* Not included are A123's contracts with the U.S. military through its Ann Arbor Mich.-based government business. Those contracts will go to Navitas Systems, of Woodridge, Ill., for $2.25 million.

* A123 Systems, Inc., is a developer and manufacturer of lithium iron phosphate batteries. It was awarded $249 million of Recovery Act funds in order to build lithium-ion battery manufacturing facilities in the U.S. According to the Department of Energy, with these facilities, more than 3,000 jobs were to be created by 2012.

* Bloomberg reported in August that Wanxiang Group Corp. had offered financing worth $450 million to the financially struggling company, a move that drew the ire of congressional Republicans who worried about a Chinese company acquiring a business that had been heavily funded by U.S. taxpayer dollars.

* According to an August report by Reuters, A123 had promised 38,000 jobs with the Recovery Act funding, but had only added 1,000 jobs since receiving the grant.

* In October, A123 backed off on the plans with Wanxiang, instead agreeing to sell its automotive assets to U.S-based Johnson Controls for $125 million. The company also voluntarily entered into Chapter 11 bankruptcy.

* The assets went to auction this weekend, and Johnson Controls announced that it was unable to compete with Wanxiang's offer.

* "While A123's automotive and government assets were complementary to Johnson Controls' portfolio and aligned with our long-term goals, Wanxiang's offer was beyond the value of those assets to Johnson Controls," said Alex Molinaroli, the president of Johnson Controls Power Solutions.

* Dave Vieau, Chief Executive Officer of A123, stated this weekend, "We think we have structured this transaction to address potential national security concerns expressed during the review of our previous investment agreement with Wanxiang announced in August as well as to address concerns raised by the Department of Energy. We believe this transaction balances those risks with A123's obligation to act in the best interest of our creditors."

* The completion of the sale is subject to closing conditions, including approval from Bankruptcy Court and from the Committee for Foreign Investment in the United States.

* The assets from the sale are less than the total amount owed to creditors, so A123 does not expect any recoveries for its current shareholders and believes its stock to have no value, the company stated.

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