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A123 could lose the rest of its $249 million grant

We can put this under the "Duh" files: A123 Systems won't receive the remaining amount of its federal grant if Wanxiang Group is approved as the new owner.

According to Reuters, which spoke to an unnamed official from the U.S. Department of Energy (DOE), the DOE will cut A123 off from its $249 million grant the company received in 2009. A123 has only used $133 million of the grant so far.

The official, who noted that all parties were aware of this consequence during last weekend's auction of A123, said that the grant requires equipment and facilities funded by taxpayers to stay in the United States.

DOE also has the right to compensation if it doesn't approve of Wanxiang's purchase of A123. Wanxiang Group said it would respect the DOE's wishes, no matter the outcome.

Many have been very critical of A123's purchase by a Chinese company. Some concerns include the fact that taxpayer dollars were wasted on a grant for a company that is now in China's hands, and the fact that A123 has contracts with the U.S. Department of Defense (meaning, China could potentially get a hold of sensitive U.S. military information).

However, Wanxiang Group didn't purchase the government contracts with the DOD; Illinois-based Navitas Systems did for $2.25 million.

Chinese firm Waxniang Group won the auction for A123 Systems on Saturday for about $260 million. The sale is expected to be approved by the Delaware Bankruptcy Court today.

Back in mid-October, A123 Systems officially filed for bankruptcy and agreed to sell its automotive business assets to Johnson Controls -- a company that optimizes energy efficiencies in car batteries, buildings and electronics. However, Johnson Controls clearly lost the bid to Wanxiang last weekend. If the sale for Wanxiang isn't approved, Johnson Controls said it would like to bid again.

Before October's bankruptcy filing, A123 was missing its loan payments. It had received $249.1 million in grants from the U.S. government in 2009 to develop green, electric car batteries. It was discovered that the U.S. government gave A123 a $1 million grant the day it filed for bankruptcy.

A123 Systems suffered a huge kick earlier this year when it announced a $55 million battery replacement program for Fisker Automotive's Karma. The vehicle had issues with the batteries' hose clamps. 

Source: Reuters

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Common sense?
By fic2 on 12/11/2012 12:54:07 PM , Rating: 2
How did common sense creep into a gov't grant? Need to nip that sh1t in the bud!

RE: Common sense?
By ipay on 12/11/2012 1:35:29 PM , Rating: 2
Nip? Article didn't mention the Japanese.

Kidding, people. Relax.

RE: Common sense?
By Uncle on 12/11/2012 1:44:55 PM , Rating: 3
No more Industrial Espionage from the Chinese. The Chinese are so loaded with American cash they can just come to America and buy the companies outright. BAhahahah

RE: Common sense?
By maugrimtr on 12/13/2012 5:28:34 AM , Rating: 3
This was worth far more than €260m to China. Now they don't have to pay anything for R&D, they will obtain all of A123's patents for the technology, and they are free to export the technology to China or elsewhere globally. Without the DOD interference, this can also be used for military applications. Massive win for their industries.

RE: Common sense?
By Richard875yh5 on 12/16/2012 8:13:25 AM , Rating: 2
The mone A123 got from our government should be taken back before the sale to the Chinese. This would make it less attractive to the Chinese.

RE: Common sense?
By Ammohunt on 12/11/2012 1:55:18 PM , Rating: 1
Common sense would have not loaned the money to fantasy "green economy" companies backed by 0% consumer demand in the first place.

RE: Common sense?
By RufusM on 12/11/2012 2:37:06 PM , Rating: 3
This could be a new startup model:

1. Start green-style company with government money
2. Spend the government money to hire people that generally know what they're doing but don't worry about any kind of profitability or spending
3. After a while you'll have something of value and you'll be out of money, but don't worry
4. Declare bankruptcy then sell out to any buyer offering many millions of dollars
5. Move to an island and retire

RE: Common sense?
By idiot77 on 12/11/2012 5:18:21 PM , Rating: 3
It's the Republican way. The D's just are now finally catching up.

And before you piss and moan about that statement.... go look carefully at all the defense 'start ups' from the 80's and 90's that were shells and disappeared.

RE: Common sense?
By TSS on 12/11/12, Rating: 0
RE: Common sense?
By 1prophet on 12/12/2012 4:01:29 AM , Rating: 3
The corporate brainwashing that led America to where it is today is strong in this one,

the Chinese routinely subsidies their companies for long term nationalistic goals and demand anyone doing business in their country must share their IP is excused as just part of the cost of doing business,

but if Americans refuse to give their hard earned tax money to foreigners it is called protectionism.

The short term corporate whore, profit only matters mentality, even if you sell out the very country that enables you is what is destroying this country and those that drink the corporate Kool Aid think it's just good business.

"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser

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