Chinese company wins bid for US battery maker A123


An A123 Systems Inc. high power Nanophospate Lithium Ion Cell for Hybrid Electric Vehicles battery is displayed in Livonia, Michigan. Bankrupt battery maker A123 Systems Inc. on Sunday, Dec. 9, 2012, said it will sell most of its assets to the U.S. arm of Chinese auto parts conglomerate Wanxiang Group Corp. for $256.6 million. Wanxiang America Corp. won an auction conducted under the supervision of the U.S. Bankruptcy Court for the District of Delaware. (AP Photo/Paul Sancya, File)

NEW YORK— Bankrupt battery maker A123 Systems Inc. on Sunday said it will sell most of its assets to the U.S. arm of Chinese auto parts conglomerate Wanxiang Group Corp. for $256.6 million.

Wanxiang America Corp. won an auction conducted under the supervision of the U.S. Bankruptcy Court for the District of Delaware.

A123’s government business will be sold separately, for $2.25 million, to Navitas Systems, of Woodridge, Illinois.

A hearing seeking the necessary court approval of the sale is scheduled for Tuesday. The deal must also be okayed by the Committee for Foreign Investment in the United States, a federal inter-agency committee that reviews sales of U.S. companies to foreign owners. A123 has about 2,000 employees.

Waltham, Massachusetts-based A123, which makes lithium ion batteries for electric cars, grid storage and commercial and military applications, was awarded a $249 million grant from the Department of Energy in August 2009 to help it build U.S. factories. About $130 million of that grant was delivered before the company fell victim to the lackluster market for electric cars.

In September 2009, it also held a successful initial public offering, raising $380 million as its stock gained more than 50 percent, to close over $20. Shares closed at 13 cents the session before it filed for bankruptcy protection.

Despite opening several plants, developing highly-touted new technology, including a battery that could operate in extreme heat or cold, and signing deals with top automakers like General Motors, Chrysler and India’s Tata Motors, the company never posted a profit. In August, it reported an $83 million loss for the second quarter. At the same time, A123 said it had reached a financing deal with Wanxiang Group for up to $450 million to help it stay afloat.

But still short of cash, the company sought bankruptcy protection in October, and said it would sell its automotive unit to Milwaukee-based auto parts marker Johnson Controls Inc. for $125 million.

Wanxiang challenged Johnson Controls’ role as the primary bidder, and stepped in to provide bankruptcy financing when the U.S. company declined to do so. In a statement Sunday, Johnson Controls said it officially withdrew from the auction when it declined to match Wanxiang’s bid, because the price was higher than the value of the assets to its operations.

The Justice Department has said A123 needs the government’s consent to sell its assets, maintaining in Bankruptcy Court that any sale must protect the government’s interests because of the 2009 grant.

The Justice Department maintained that the government’s assets included the roughly $120 million that wasn’t handed over yet under the grant, A123’s cost-sharing obligations under federal assistance programs, and property and equipment purchased with government funds.

A123 said on Sunday that the terms of the deal will see Wanxiang acquire its automotive, grid and commercial business assets, including all technology, products, customer contracts and U.S. facilities in Michigan, Massachusetts and Missouri. It will also get A123’s cathode powder manufacturing operations in China and its equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive.

Excluded from the agreement is A123’s Ann Arbor, Michigan-based government business, including all U.S. military contracts, which would be acquired for $2.25 million by Navitas Systems, a company that makes energy storage products for commercial, industrial and government agencies.

“”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,” said A123 CEO Dave Vieau in a statement. “We believe this transaction balances those risks with A123’s obligation to act in the best interest of our creditors.”

If the deals are approved by the court, the shares will be worthless. That’s because proceeds from the sale of the two parts of A123 would be less than the company owes its creditors.

Based in Chicago, Wanxiang America has been in the automotive and industrial markets in the U.S. since 1994 and currently has more than 3,000 U.S. employees. It is a subsidiary of Wanxiang Group, China’s largest automotive components manufacturer and one of China’s largest non-state-owned companies.

“We plan to build on the engineering and manufacturing capabilities that A123 has established in the U.S. and we are committed to making the long-term investments necessary for A123 to be successful,” said Pin Ni, president of Wanxiang America.

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  • Alexander Aamproz

    Better to buy bankrupt companies than to keep $ , 
    back up with unlimited bombs, but no economic values except debts…

  • ofwme2807

    America wake up you clean you house and put order in the house….Don’t ever let a Chinese company buy copy and control US designed and patented products or it will be used against US later…They are buying at will US bankrupt companies in the guise of saving the company and jobs for Americans they will become security problem to US…of course all these are sponsored by the mother commies in Beijing…

  • ofwme2807

    China is buying US bankrupt companies to spy and copy US technologies…Their real intention is hidden both economically and militarily…They want to copy and produce another inferior products to be sold later to the world by changing and altering the design but actually doing nothing…Chinese spying on the US continues….this Chinese company buying this latest US product will add nothing or value to the business all these buying are of course sponsored by the communist spies of China so the US beware of Chinese companies….when will you learn from mistakes???

  • Night

    instant access to patents and technology….. ungas don’t sell it to the checkwas!!!

    • DakuAkongUtin

      Chinese companies are a big help to fledging US companies. Either they go by the Dodo bird of Madagasgar or live another day . A123 has thousands of employees who need jobs in that part of Illinois. IM sure may mga Kayumanggi dyan. Irregardless of who owns who , they are lucky to have a job.

      • Night

        mali ka diyan kasi US Govt nag pautang diyan as a123 para mag start up…. ngayon bibigay mo lang yung technology sa mga ungas na terroristang intsik na yan….. big mistake….

        dapat ipa bankrupt nalang ng US gov’t yan at yung technology ibigay sa gusto bumili na Us company

      • DakuAkongUtin

        Wow, ang loyal mo sa mga Puti. I adore your utmost loyalty to please the white race.  But your arguments are out of whack.   Americans have no choice but sell out in order to save jobs and put people back to work, food on the table, send kids toschool, pay their monthly mortgages, fill the gas tanks , and some money for vacation and set aside for emergencies. 
        Chinese companies are doing good by saving these fledging companies in light of a very competitive market today. And who would save this company that has been behind the curve in battery development. The big ones are out there the reason this company is crashing. Chinese investors buying it could be facing a losing investment instead of making profits. Investing is a risky business.

        So why are you badmouthing something Chinese investors are doing ? Are you afraid the battery techs will be moved to China ? If China owns it, it has every right to move its assets anywhere , right ? May ari ka ba sa companya nito? Kung empleyado ka lang, do you think you own the company ? Yan ang isip kayumangmang, you think you own the company. If you dont like the company, go somewhere else.

      • Night

        i’m not loyal to puti… i’m not supportive of the animalistic checkwas either with their behaviour in west philippine sea….

        what the US can do is start another way… that will jumpstart their economy… i hope with some backward country like venezuela or some other crazy country

      • pfc_kulapu

        Chito Sta Romana (aka AFPako, Inteliling ng 11th IB daw)..You are a certified backstabber…Kapwa mo filipino bina backstab mo.Tanda na Tanga..

      • DakuAkongUtin

        Hoy, naging Darna ka na !! Dios Ko santimaria,  hindi parin natapos ang pagka kurakot mo ? Mag antay ka lang, monitored ka namin sa 11 th IB.

      • pfc_kulapu

        Chito Sta Romana (aka AFPako, Inteliling ng 11th IB daw).
        You hated marcos bcuz he was a dictator, he murder thousand of pilipino..
        But you love Mao tse Tung even he murdered million chinese…


  • macobex

    And this is a reason why the US can NEVER OPENLY OPPOSE China. China has the US by the neck. Lamentably, we’re on our own with the West Philippine Sea.

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