Official: A123 Systems Files for Bankruptcy
October 16, 2012 4:44 PM
The EV battery maker is selling all assets to Johnson Controls for $125 million
It's official: electric vehicle (EV) battery maker A123 Systems has filed for bankruptcy.
Earlier today, it was reported that
A123 Systems was missing loan payments
and may look into bankruptcy protection. That "may" turned into a quick "will," as the lithium-ion battery maker has officially agreed to sell its automotive business assets to Johnson Controls -- a company that optimizes energy efficiencies in car batteries, buildings and electronics.
As part of the agreement, A123 will sell all of the following to Johnson Controls: automotive business assets including automotive products, technology and customer contracts; its cathode powder manufacturing facilities in China; its facilities in Livonia and Romulus, Michigan, and A123's equity interest in Shanghai Advanced Traction Battery Systems Co. The total transaction is worth $125 million.
Johnson Controls, however, will license certain grid, government and commercial businesses back to A123, and will allow A123 to participate in discussions concerning alternatives for these businesses.
"We believe the asset purchase agreement with Johnson Controls, coupled with a Chapter 11 filing, is in the best interests of A123 and its stakeholders at this time," said David Vieau, CEO of A123 Systems. "We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion. Since disclosing the Wanxiang agreement, we have simultaneously been evaluating contingencies, and we are pleased that Johnson Controls recognizes
the inherent value of our automotive technology
and automotive business assets.
"We are also pleased that we have received indications of interest that recognize the value of our grid and commercial businesses. We are encouraged by the significant interest we have received, as multiple parties have submitted proposals for these businesses. As we move through this transaction process, we expect to continue operating and working with customers and suppliers."
A123 Systems and all of its U.S. subsidiaries filed voluntary petitions today for reorganization under Chapter 11. A123 will receive $72.5 million in "debtor in possession" financing from Johnson Controls to help continue operations.
"Our interest in A123 Systems is consistent with our long-term growth strategies and overall commitment to the development of the advanced battery industry," said Alex Molinaroli, president of Johnson Controls. "Requirements for more energy efficient vehicles continue to increase, which is driving automotive manufacturers to pursue new technologies across a broad spectrum of powertrains and associated energy storage solutions. We believe that A123's automotive capabilities are a good complement to our existing portfolio and will further advance Johnson Controls' position as a market leader in this industry."
A123 Systems joins a list of other green companies that fell deep into the red and filed for bankruptcy. Back in September 2011, solar panel company
Solyndra filed for bankruptcy
after receiving a $535 million loan from the U.S. Department of Energy (DOE). In November,
(maker of flywheels for grid efficiency) filed after receiving a $43 million loan guarantee from DOE in 2010.
In January 2012, EV battery maker
Ener1 filed for bankruptcy
after its subsidiary, EnerDel, won a $118.5 million grant from DOE in 2009.
In addition to these woes, A123 Systems itself suffered a huge kick earlier this year when it announced a $55 million battery replacement program for Fisker Automotive's Karma due to the vehicle's issues with the batteries' hose clamps.
Republican presidential candidate Mitt Romney has been known for
blasting the Obama administration's green efforts
, such as EV makers Tesla and Fisker, and this latest bankruptcy may further fuel his fire.
"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch
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