A123 Files for Bankruptcy, Sells Automotive Unit to Johnson Controls
A123, the Waltham, Mass-based company that supplied batteries to GM and luxury car maker Fisker Automotive, has agreed to sell to Johnson Controls all of its automotive technology, products and customer contracts; its two Michigan factories; its cathode powder manufacturing facility in China; and its equity interest in Shanghai Advanced Traction Battery Systems.
Johnson Controls intends to license back to A123 certain technology for its grid, commercial and government businesses, and also has agreed to provide $72.5 million in financing to support A123’s continued operations during the sales process.
A123 filed for Chapter 11 in the US Bankruptcy Court for the District of Delaware a day after failing to make a scheduled $2.8 million interest payment to bondholders. In its filing, the company lists assets of $459.8 million and debt of $376 million as of August 31.
A123 said it continues to discuss strategic alternatives and has received several indications of interest for its grid, commercial and government businesses.
Two months ago, China’s Wanxiang Group made a non-binding agreement with A123 to invest $450 million into the failing battery maker in return for an 80 percent stake in the company.
A123 was once considered one of the most promising companies in the clean fuel sector, garnering interest and capital from major investors as well as landing a $249 million grant from the US Department of Energy’s Electric Drive Vehicle Battery and Component Manufacturing Initiative. Much of those funds, as well as another $125.2 million in tax credits from the Michigan Economic Growth Authority, were used to refurbish two factories in the Midwestern state.
But in recent months, the battery maker has struggled to remain competitive and keep a lid on manufacturing costs. It has been plagued with a series of costly problems over the past year including multiple recall programs, an investor class action lawsuit, straight quarterly losses and weak sales.
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