By Jim Taylor, Editor MACS ACtion Magazine
On October 16, A123 Systems Inc. filed for reorganization protection under Ch. 11 of the U.S. Bankruptcy Code. The maker of rechargeable batteries used in a variety of electric and hybrid vehicles had signaled in August that it was uncertain of its “ability to remain a going concern.”
At that time Wanxiang Group, a large Chinese parts maker, had expressed interest in buying controlling rights in the company, but the sale stalled and A123 could not meet its debt obligations. In the October filing, A123 said that it was considering “more than one potential transaction” for the company but that there was still no assurance that the company could stay in business.
However, within hours of the bankruptcy filing came word that U.S battery maker Johnson Controls, Inc.“plans to acquire A123’s automotive business assets, including all of its automotive technology, products and customer contracts; its facilities in Livonia and Romulus, Michigan; its cathode powder manufacturing facilities in China, and A123’s equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive.”
The CEO of A123, David Vieau said in the press release, “We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion.”
The new agreement is valued at $125 million, and Johnson Controls has also committed $72.5 million to finance the bankrupt company’s continued operation while the sale is pending. The deal is subject to all the usual legal requirements, conditions and approvals. Interestingly, one item that could stop the purchase is a higher offer from another buyer to purchase the same assets.
A123 provides passenger car rechargeable batteries and control systems to GM, BMW, Fisker, SAIC and Geely, plus systems for commercial trucks and buses to Volvo, Daimler and others.
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