* Wanxiang, Johnson Controls agree to Dec. 6 auction
* Wanxiang needs regulatory approval for its bid
* A123 banker tells court numerous bids expected
* A123 filed for bankruptcy protection last month
By Tom Hals
WILMINGTON, Del., Nov 8 A U.S. and a Chinese
auto parts maker will face each other on Dec. 6 in an auction to
buy A123 Systems Inc, a bankrupt maker of batteries for electric
cars that was partly funded by the U.S. government.
Wanxiang Group Corp, whose rescue deal for A123 unraveled
earlier this year, will square off against Johnson Controls Inc
of Milwaukee, the parties told a bankruptcy court on
Thursday. Attorneys for NEC Corp of Japan and Siemens
AG of Germany said their companies were also
interested in bidding.
The sale has already drawn scrutiny from U.S. politicians
because A123, whose lithium ion batteries are also used for
power grid storage, has received $130 million in grant money
from the U.S. Department of Energy as part of a program to
support battery production.
A123 entered bankruptcy last month with an agreed bid of
$125 million for its automotive business from Johnson Controls.
That will serve as an initial bid that is meant
to encourage other potential buyers to come forward. The money
raised in the auction will repay A123's creditors.
Wanxiang told Delaware Bankruptcy Court Judge Kevin Carey on
Thursday that it had sent A123 a confidential proposed bid on
Wednesday night for the entire business.
The Chinese company's bid will need approval from the
Committee on Foreign Investment in the United States, and two
Republican senators have asked the committee to review its
Wanxiang had sought to have the auction pushed further into
December, giving it more time to obtain regulatory clearance,
while Johnson Controls originally wanted the auction on Nov. 17.
A123's investment banker told the court on Thursday that he
expected other bidders. "This is not a two-horse race. This is a
10-horse race," said Timothy Pohl of Lazard Freres & Co.
While Pohl declined to name potential bidders, an attorney
for NEC said the company was interested in the nonautomotive
parts of A123. Siemens' attorney did not say what the German
company would bid for.
A123's lawyer, Jan Baker of Latham & Watkins, told the court
the sooner the company finds a buyer, the better. He said
employees were leaving the company, which could potentially
undermine the battery maker's value.
Carey approved incentive and retention plans for A123
employees over the objection of the U.S. Trustee, an agent of
the Department of the Justice who oversees bankruptcies.
A123, based in Waltham, Massachusetts, supplies batteries
for Fisker Automotive's Karma, a plug-in hybrid, and the
Chevrolet Spark EV, which will be introduced next year by
General Motors Co.
A123 ran into problems last year after Fisker Automotive cut
battery orders for the Karma in October 2011. This year, A123
had to recall battery packs made for Fisker, which made up 26
percent of A123's revenue in 2011.
The battery maker struck a $465 million rescue deal with
Wanxiang that was meant to keep it out of bankruptcy, but that
deal came apart when A123 failed to meet certain conditions.
The case is A123 Systems Inc, Delaware Bankruptcy Court, No.