DETROIT Oct 17 The Chinese firm whose $465
million bid for bankrupt A123 Systems Inc unraveled
this week said on We dnesday its interest in the maker of
lithium-ion batteries remains unchanged.
"Wanxiang's goal and interest remains the same," said Pin
Ni, head of U.S. operations for Wanxiang Group Corp, referring
to its objective in acquiring all of A123. The Hangzhou-based
company supplies auto-component and lithium-ion battery
His comment came a day after A123 Systems, which won a $249
million U.S. government grant in 2009 for jump-starting its
business, filed for bankruptcy.
A123 agreed to sell its automotive operations, including two
factories in Michigan, for $125 million to Milwaukee-based
Johnson Controls Inc a top battery supplier and another
recipient of federal green subsidies. It has attracted bidders
for its non-automotive operations as well.
It was not clear just how Wanxiang could get back into a
deal to acquire A123, whose deal with Johnson Controls must be
approved by the courts.
"The deal could be countered by other offers that would be
more beneficial to AONE's creditors," Jefferies analyst Peter
Nesvold said in a research note. "Wanxiang is the most likely
other participant in this process, and we are not aware of other
suitors at this time."
An individual familiar with the matter noted that what he
described as A123's desire to emerge fully from bankruptcy might
provide a break for Wanxiang to get back into the deal.
"Chapter 11 is a public process, so anything is still
possible," the individual said.
A123's bankruptcy filing came after a $465 million rescue
deal with Wanxiang unraveled, which in turn prompted A123 to
start the proceedings to sell its automotive operations to
A123 came under financial pressure after Fisker Automotive,
one of its primary customers, cut battery orders for its Karma
plug-in hybrid in October 2011. The supplier's trouble worsened
this year when it was forced to recall battery packs made for
Fisker, which accounted for 26 percent of A123's 2011 revenue.
The bankruptcy filing comes after roughly eight months of
attempts by A123 to find a buyer or strategic investor, Chief
Financial Officer David Brystash said in a court filing. In
March, A123 hired Lazard Freres & Co, which contacted 74
potential partners and investors.
Twenty-four discussed the process with Lazard, but only
Wanxiang offered to invest in A123 as a going concern. In
August, A123 announced the $465 million rescue deal with
Wanxiang, which immediately gave A123 a $22.5 million loan,
including a cash advance of $12.5 million.
Future cash infusions from Wanxiang were contingent on A123
meeting certain requirements, included getting approval from the
Committee of Foreign Investment and the Chinese government, as
well as the absence of any default.
Shortly before filing for bankruptcy, it became apparent
that A123 would fall short of some of those conditions,
according to court documents.