Detroit-based battery developer and manufacturer A123 Systems announced today that it filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in Delaware.
A123 Systems, which had received $249 million in federal grants as part of the stimulus bill (having used $129 million to date), said that the petitions, which do not include its overseas subsidiaries, were made so that they can facilitate the sale of its automotive business assets to Johnson Controls Inc. (JCI).
Under the agreement, JCI will pay US$125 million and acquire A123’s automotive technology, products, customer contracts, its two Michigan plants, its cathode powder facilities in China and A123’s stake in Shanghai Advanced Traction Battery Systems Co.
There are also provisions for Johnson Controls to license back certain technology to A123, which the latter will use in its grid, commercial and government business.
“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 the company’s CEO David Vieau.
He added that the decision to sell the automotive business to Johnson Controls was made after a deal with the Chinese Wanxiang company for the purchase of an 80 percent stake in A123 fell through “as a result of unanticipated and significant challenges to its completion”.
Johnson Controls has also pledged to provide US$72.5 million in “debtor in procession” financing to ensure that A123 continues to operate normally until the transaction is completed.
“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 Power 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 has contracts with several automakers to supply them with batteries for electric and hybrid cars including GM and its upcoming Chevrolet Spark EV, the Fisker Karma and the BMW Group.
By Andrew Tsaousis
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