A123 Systems Won't Get Rest of Federal Grant if Owned by Chinese Company
December 11, 2012 11:24 AM
comment(s) - last by
A123 could lose the rest of its $249 million grant
We can put this under the "Duh" files:
won't receive the remaining amount of its federal grant if Wanxiang Group is approved as the new owner.
, 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.
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RE: Common sense?
12/11/2012 1:55:18 PM
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?
12/11/2012 2:37:06 PM
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?
12/11/2012 5:18:21 PM
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.
"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins
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