Oct 26 Bankrupt battery maker A123 Systems Inc
plans to ask for court approval for a loan from auto
parts maker Wanxiang Group Corp, which could give the Chinese
company an advantage over a U.S. rival in a takeover battle for
A123, which filed for bankruptcy earlier this month, has an
interim bankruptcy loan with Johnson Controls. But the
company revealed in a court filing on Friday that it reached
agreement for a replacement loan from Wanxiang.
A debtor-in-possession or DIP loan often gives the lender
significant leverage over the bankrupt company, allowing the
lender to demand asset sales and set timelines for conducting
The disclosure was contained in an agenda for a hearing
scheduled for Tuesday in the Delaware Bankruptcy Court in
"The debtors intend to file an emergency motion in advance
of the hearing seeking approval of a replacement DIP facility
with Wanxiang America Corp," said a status update in the agenda
Michael Freitag, a spokesman for A123, and Bojan Guzina, a
lawyer for Wanxiang, declined to comment.
Rebecca Fitzgerald, a spokeswoman for Johnson Controls, did
not immediately respond to a message seeking a comment.
A123, a maker of lithium-ion batteries used in hybrid and
electric vehicles, had received a $249 million U.S. government
grant in 2009 designed to boost the renewable energy industry.
However, the company declared bankruptcy amid a
disappointing market for electric vehicles and after it had to
recall battery packs made for Fisker Automotive, which made up
26 percent of A123's revenue in 2011.
Fisker on Friday objected to A123's plans to selling the
company at an auction with an initial "stalking horse" bid from
Johnson Controls, or JCI, for $125 million.
"The best interests of the estates, however, are not well
served through a hasty and unfair sale process designed to
ensure that JCI is the ultimate purchaser," Fisker said in its
It asked the court to extend bidding deadlines for 30 days.
Wanxiang would need approval from the Committee on Foreign
Investment in the United States and the government of China to
Wanxiang's lawyer told the court earlier this month the
Chinese company intended to present its own stalking horse
proposal to the court next Tuesday, but that matter was
postponed to Nov. 5, according to the agenda.
Wanxiang has been pursuing A123 for months. The bankruptcy
came after a $465 million rescue deal by the Chinese company
unraveled after the U.S. battery maker was unable to meet some
conditions of the agreement.
The case is A123 Systems Inc, Delaware Bankruptcy Court, No.