Chinese Firm Wins Auction for Battery Maker A123
A123 Systems Employees Perform Quality Check on a Lithium Ion Battery Pack
David Shepardson
December 9, 2012
December 9, 2012
Washington — A Chinese firm has agreed to acquire most of the assets of bankrupt electric vehicle battery maker A123 Systems Inc. for $256.6 million, the company said Sunday.
Wanxiang Group Corp. will acquire nearly all of Waltham, Mass.-based A123’s automotive, grid and commercial business assets, including its U.S. facilities in Michigan, Massachusetts and Missouri.
Navitas Systems, a Woodridge, Ill.-based company, has agreed to buy A123’s Ann Arbor-based government business, including all U.S. military contracts for $2.25 million.
The firms outbid others — including Johnson Controls — at a bankruptcy auction on Saturday.
“We are pleased with the result of the auction and believe that the selected bids from Wanxiang and Navitas maximize the value of A123’s assets for the benefit of our stakeholders,” said A123 CEO Dave Vieau. “We think we have structured this transaction to address potential national security concerns.”
But some members of Congress still raised concerns.
“I am very concerned by Wanxiang’s acquisition of A123. A123 maintains several contracts with the Department of Defense and given the thin line between Wanxiang and the Chinese Government,” said Rep. Bill Huizenga, R-Zeeland, in a statement. “I am concerned about the government of China having access to sensitive technologies being used by our military forces.”
The U.S. Bankruptcy Court in Delaware will hold a hearing on the sale of A123 on Tuesday.
A123 filed for bankruptcy in October and initially sought approval to sell the bulk of itself to Johnson Controls Inc. in less than six weeks.
The startup — which has lost $900 million since 2007 and has 1,000 employees and contractors in Michigan — received $50 million in debtor-in-possession financing from Wanxiang.
A123 vowed to create 3,000 jobs by the end of 2012, but only has 1,300. The company won $249.1 million in grants from the Obama administration in 2009 to build battery plants in Romulus and Livonia, but has only spent $132 million. It also received more than $125 million in tax credits from the state of Michigan.
In a letter to Treasury Secretary Tim Geithner — who chairs the Committee on Foreign Investment, which reviews the sale of U.S. companies — Sens. Carl Levin, D-Detroit, Debbie Stabenow, D-Lansing, and members of the House raised concerns.
They said the deal may pose a “threat to U.S. national security.”
The Energy Department could seek to recover equipment purchased with the A123 grant if the plants aren’t operated. Or it could release the remaining $117 in grant funding.
A123 has 625 employees at plants in Romulus and Livonia and an Ann Arbor office, along with 348 temporary workers in the state.
The company is the latest in a string of advanced battery firms that have gone bankrupt despite millions of dollars in subsidies from state governments and the Bush and Obama administrations.
In January, New York-based Ener1 filed for bankruptcy protection. A similar filing was made in March by Canada-based Azure Dynamics, which has offices in Oak Park and installs the battery electric powertrain in Ford’s Transit Connect.
The Obama administration awarded $2.4 billion in stimulus grants in August 2009 for advanced batteries and electric vehicles, saying the awards would create thousands of jobs.
The president set a goal of 1 million electric vehicles on the road by 2015, but sales have totaled fewer than 40,000 since 2011. Many battery suppliers have created a small fraction of the promised jobs.
dshepardson@detroitnews.com
(202) 662-8735
Navitas Systems, a Woodridge, Ill.-based company, has agreed to buy A123’s Ann Arbor-based government business, including all U.S. military contracts for $2.25 million.
The firms outbid others — including Johnson Controls — at a bankruptcy auction on Saturday.
“We are pleased with the result of the auction and believe that the selected bids from Wanxiang and Navitas maximize the value of A123’s assets for the benefit of our stakeholders,” said A123 CEO Dave Vieau. “We think we have structured this transaction to address potential national security concerns.”
But some members of Congress still raised concerns.
“I am very concerned by Wanxiang’s acquisition of A123. A123 maintains several contracts with the Department of Defense and given the thin line between Wanxiang and the Chinese Government,” said Rep. Bill Huizenga, R-Zeeland, in a statement. “I am concerned about the government of China having access to sensitive technologies being used by our military forces.”
The U.S. Bankruptcy Court in Delaware will hold a hearing on the sale of A123 on Tuesday.
A123 filed for bankruptcy in October and initially sought approval to sell the bulk of itself to Johnson Controls Inc. in less than six weeks.
The startup — which has lost $900 million since 2007 and has 1,000 employees and contractors in Michigan — received $50 million in debtor-in-possession financing from Wanxiang.
A123 vowed to create 3,000 jobs by the end of 2012, but only has 1,300. The company won $249.1 million in grants from the Obama administration in 2009 to build battery plants in Romulus and Livonia, but has only spent $132 million. It also received more than $125 million in tax credits from the state of Michigan.
In a letter to Treasury Secretary Tim Geithner — who chairs the Committee on Foreign Investment, which reviews the sale of U.S. companies — Sens. Carl Levin, D-Detroit, Debbie Stabenow, D-Lansing, and members of the House raised concerns.
They said the deal may pose a “threat to U.S. national security.”
The Energy Department could seek to recover equipment purchased with the A123 grant if the plants aren’t operated. Or it could release the remaining $117 in grant funding.
A123 has 625 employees at plants in Romulus and Livonia and an Ann Arbor office, along with 348 temporary workers in the state.
The company is the latest in a string of advanced battery firms that have gone bankrupt despite millions of dollars in subsidies from state governments and the Bush and Obama administrations.
In January, New York-based Ener1 filed for bankruptcy protection. A similar filing was made in March by Canada-based Azure Dynamics, which has offices in Oak Park and installs the battery electric powertrain in Ford’s Transit Connect.
The Obama administration awarded $2.4 billion in stimulus grants in August 2009 for advanced batteries and electric vehicles, saying the awards would create thousands of jobs.
The president set a goal of 1 million electric vehicles on the road by 2015, but sales have totaled fewer than 40,000 since 2011. Many battery suppliers have created a small fraction of the promised jobs.
dshepardson@detroitnews.com
(202) 662-8735
SOURCE: Detroit News
Leave a Reply
Want to join the discussion?Feel free to contribute!