China's Wanxiang wins auction for assets of battery maker A123

Chinese firm Wanxiang emerged as the winning bidder of bankrupt battery-maker A123's assets after a days long auction that lasted until nearly 4 a.m. Saturday.

The sale of A123, the recipient of a $249.1 million federal grant and tens of millions of dollars in tax credits from Michigan, has been the subject of intense political debate, with military leaders and politicians arguing that U.S.-funded technology should not be transferred to the foreign firm.

At the auction, held in Chicago, Johnson Controls Inc. of Milwaukee and NEC Corp. of Japan teamed up in an unsuccessful effort to top the bid of Wanxiang Group Corp., a Chinese auto parts maker whose North American headquarters is in Elgin, Ill. The German electronics giant Siemens AG also submitted a qualified bid at the auction.

A source close to the deal said the purchase price was about $250 million. Wanxiang was excluded from the purchase A123’s U.S. government and military contracts. Wanxiang, a unit of China's Wanxiang Group, made an offer to purchase the lithium-ion-battery maker earlier this year when a $465 million deal collapsed.

The Wanxiang purchase of A123 marks the second major foreign purchase of a U.S. battery company backed by Department of Energy funding. Ener1, a battery maker with operations in Indiana, was snapped up in another bankruptcy by Boris Zingarevich, a Russian businessman who at one time was in business with Russian Prime Minister Dmitry Medvedev.

Global competition over battery technology has significantly intensified despite the corporate bankruptcies. Just over a week ago Energy Secretary Steven Chu announced that the DOE would spend an additional $120 million to enhance battery technology at Argonne National Laboratory in suburban Lemont.

The hub is designed to build batteries that are five times more powerful at a fifth of the cost in five years using a strategy that has been compared to the Manhattan Project, which led to the first atomic bomb.


Source: WSJ & Electric Vehicle News

A123 Bankruptcy Auction Set For December 6th By Court

Ailing battery firm A123 Systems, which supplies batteries to Fisker, BMW and GM among others, could soon have a new owner after Delaware courts have imposed a deadline for bids.

Two companies vying for A123 and its assets are auto-parts maker Johnson Controls, and Chinese auto-parts maker Wanxiang Group.

Associated Press reports the new December 6 date has been set in place, in lieu of a November deadline, to allow more companies to compete for the bankrupt battery company.

Wangxiang Group is currently the leading bidder on A123. The company previously put forward a $465 million rescue deal for A123, which fell through when A123 was unable to meet some of the Chinese company's agreement criteria.

Johnson Controls then put in a debtor-in-possession loan, subsequently withdrawn to allow bidding from Wangxiang to go ahead. Johnson Controls still intends to acquire A123's automotive assets with a $125 million bid.

Wangxiang is currently seeking regulatory approval for its bid, from both the Committee of Foreign Investment in the U.S, and the Government of China.

The company is confident it will gain approval, but A123 had previously wanted an earlier bid deadline to guarantee Johnson Controls the sale--just in case the Chinese bid couldn't continue.

Meanwhile, a judge has approved a performance-based incentive plan at A123 for ten senior employees, and a retention plan of $2.4 million for 66 existing A123 employees.


Source: Green Car Reports

Fisker Wants Court to Delay A123 Bankruptcy Auction | Electric Vehicle News

Fisker Automotive Inc., a closely held startup carmaker led by auto designer Henrik Fisker, asked a bankruptcy judge to delay the auction of U.S. electric-car battery maker A123 Systems Inc. (AONE)

“A hurried sale process will be damaging to the estates and deprive creditors of value that may be realized through higher and better offers,” Gregg Galardi, a Fisker attorney, said in court papers filed today in Wilmington, Delaware.

Fisker, based in Anaheim, California, also said today it would file an “emergency motion” challenging a so-called debtor-in-possession loan, and didn’t provide details.

Fisker is seeking an extension of the bid deadline, auction date and related dates and deadlines in the bidding procedures request by at least 30 days, court papers show.

D.J. “Jan” Baker, a lawyer representing A123, didn’t immediately return a phone call seeking comment.

A123, the recipient of a $249 million federal grant, said it would sell its automotive-business assets to Milwaukee-based Johnson Controls Inc. (JCI) in a deal valued at $125 million. The deal is subject to other potential offers in a bankruptcy auction. A123, based in Waltham, Massachusetts, listed assets of $459.8 million and debt of $376 million as of Aug. 31 in Chapter 11 documents.

A123, which is scheduled to return to court next week to seek approval of the remainder of a $72.5 million loan, intends to file court papers seeking interim approval of a replacement debtor-in-possession facility from Wanxiang America Corp., according to court documents filed today. The company on Oct. 18 won interim court approval to borrow as much as $15.5 million in DIP financing from Johnson Controls.

‘Various Protections’

The auto company said it doesn’t oppose the need for an asset sale, just “various protections” for Johnson “that are unnecessary, excessive, and counterproductive to a successful sales process,” including a possible $7.75 million breakup fee and expense reimbursement.

The proposed procedures and protections were “crafted” for the benefit of Johnson Controls, Galardi said. “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,” he said.

In January 2010, A123 and Fisker signed a multiyear supply agreement for Fisker’s Karma plug-in hybrid electric luxury car. A123’s obligations under the supply accord, including warranty obligations, “give rise to substantial unsecured claims” in favor of Fisker that may exceed a total of $100 million, according to court papers.


Trustee Objection

Also today, U.S. Trustee Mark Kenney filed an objection to the breakup fee, saying it can’t be characterized as “actually necessary to preserve the value of the estate.”

In another objection today, patent owners including the University of Montreal asked a judge to consider the value of their exclusively licensed patents for lithium battery technology and the rights of A123 to keep or transfer them in the sale.

Johnson Controls plans to acquire A123’s automotive business assets, including its facilities in Livonia and Romulus, Michigan. The Milwaukee-based company also will obtain A123’s cathode powder plant in China and its equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive Industry Corp.


‘Purchased Assets’

Massachusetts Clean Energy Technology Center filed an objection today to the sale motion saying the proposed court documents don’t “reasonably identify the purchased assets, nor clearly state the treatment of the claims secured by the purchased assets.”

“The term ‘Auto Business’ is not only vague but misleading,” Massachusetts Clean Energy Center’s attorney Michael Barrie said in court papers. The proposed bidding procedures “do not limit the bidding to the purchased assets but permit bidding on any other assets” of A123, Barrie said.

Massachusetts Clean Energy Center, created by the Green Jobs Act of 2008, wants the court to make A123 amend certain documents “so that they reasonably identify which assets are being sold and which leases are being assumed with sufficient particularity to allow MA-CEC to ascertain whether its collateral will be among the assets eligible for sale,” Barrie said.

The Massachusetts Clean Energy Center provided A123 a $5 million secured loan in October 2010, court papers show. The agency would forgive and A123 wouldn’t need to repay the loan if certain employment and capital expenditures were met.


Half Forgiven

Half of the loan would be forgiven if A123 creates 263 jobs in Massachusetts by the end of 2014 and maintains at least 513 jobs from January 2013 through Oct. 8, 2017, according to court documents. If the company doesn’t achieve those milestones they can get partial forgiveness analogous to the levels they do reach.

The loan was amended in 2011 with the Center forgiving half after the battery-maker spent at least $12.5 million in infrastructure and leasehold improvements. The company still owes about $2.8 million in principal and interest.

The case is In re A123 Systems Inc., 12-12859, U.S. Bankruptcy Court, District of Delaware (Wilmington).


Source: Electric Vehicle News

A123 gives up, files for bankruptcy (and the political sparks fly)

After a long struggle, advanced battery maker and energy storage systems producer A123 Systems has called it quits. The troubled company filed for bankruptcy on Tuesday, which has industry and political watchers anticipating the unfortunate news will become yet another election season rallying point for continued criticisms of the Obama administration's support for EV deployment and a strong U.S. battery industry.

In fact, the political sniping has already begun, according to a New York Times article. Republican presidential candidate Mitt Romney has criticized the president for his support of green energy programs consistently. Reacting to the A123 news this week, Romney press secretary Andrea Saul was quoted as saying "A123's bankruptcy is yet another failure for the president's disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work."

A123 was awarded a $249 million stimulus grant, and has used about $132 million of that amount, according to a DOE official quoted in the article. At the time the grants were awarded and long after, A123 was considered one of the most promising grant recipients. The DOE official said the money was not wasted as a result of the bankruptcy because the two factories will be sold to Johnson Controls, another U.S. battery maker. That deal is valued at about $125 million.

Smart Grid News reported in July on A123's precarious position. The company said at the time it had enough money to keep operating for about five months. A deal announced in August to sell a majority interest to China's largest car parts maker was expected to help the company stay afloat, but A123 chose not to go through with it.

And the battery maker has been in trouble for some time. While the year started off well enough, A123 had to recall batteries it had built for Fisker Automotive, an expensive situation followed by more losses. Some industry observers pointed to production overcapacity and its inability to come up with a diversification plan to develop a serious presence in the energy storage market.

One reason the A123 bankruptcy is predicted to become an election issue is the precedent set when solar panel maker Solyndra filed for bankruptcy in September 2011. The Solyndra failure and its $535 million in DOE loan guarantees are still finding their way into political debates and criticisms of the administration's energy policies. And incidentally, Solyndra filed suit last week against several Chinese solar companies, asking for $1.5 billion in to cover business losses it claims it incurred as a result of an illegal conspiracy by the Chinese companies.

Source: SmartGridNews

Presse Release:

A123 Systems Reaches Agreement to Sell Automotive Business Assets To Johnson Controls

A123 and its U.S. Subsidiaries File Voluntary Chapter 11 Petitions To Facilitate Transaction

Process Johnson Controls to Provide $72.5 Million in DIP Financing To Support A123's Continued Operations

A123 Actively Pursuing Strategic Alternatives for Grid, Commercial, Government and other Businesses and Operations

WALTHAM, Mass.-October 16, 2012-A123 Systems, Inc. (Nasdaq: AONE) ("A123" or "the Company"), a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries and systems, today announced that it has entered into an asset purchase agreement with Johnson Controls, Inc. (NYSE: JCI) in a transaction valued at $125 million. Under the terms of the agreement, Johnson Controls plans to acquire A123's automotive business assets, including all of its automotive technology, products and customer contracts; its facilities in Livonia and Romulus, Michigan; its cathode powder manufacturing facilities in China, and A123's equity interest in Shanghai Advanced Traction Battery Systems Co., A123's joint venture with Shanghai Automotive. The asset purchase agreement also includes provisions through which Johnson Controls intends to license back to A123 certain technology for its grid, commercial and government businesses. A123 also continues to engage in active discussions regarding strategic alternatives for its grid, commercial, government and other operations, and has received several indications of interest for these businesses.

To facilitate the transaction process, A123 and all of its U.S. subsidiaries today filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The Company's subsidiaries located outside the U.S. were not included in the filings. This action is expected to allow the Company to provide for an orderly sale of the automotive business assets and all other assets and business units under Section 363 of the Bankruptcy Code and enable the Company to maximize the value of its assets for its stakeholders in a controlled, court-supervised environment.

In conjunction with the proposed transaction, A123 has received a commitment from Johnson Controls for $72.5 million in "debtor in possession" financing to support the Company's continued operations during the pendency of the sale process. The Company has filed a number of customary motions seeking court authorization to continue to support its business operations during the transaction process, including the continued payment of employee wages, salaries and health benefits without interruption.


"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 David Vieau, Chief Executive Officer of A123. "We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion. Since disclosing the Wanxiang agreement, we have simultaneously been evaluating contingencies, and we are pleased that Johnson Controls recognizes the inherent value of our automotive technology and automotive business assets. We are also pleased that we have received indications of interest that recognize the value of our grid and commercial businesses. We are encouraged by the significant interest we have received, as multiple parties have submitted proposals for these businesses. As we move through this transaction process, we expect to continue operating and working with customers and suppliers."

"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, Johnson Controls Power Solutions. "Requirements for more energy efficient vehicles continue to increase, which is driving automotive manufacturers to pursue new technologies across a broad spectrum of powertrains and associated energy storage 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."


The transaction with Johnson Controls is being completed pursuant to Section 363 of the U.S. Bankruptcy Code and is subject to, among other things, higher or otherwise better offers to purchase any or substantially all assets of the Company, Court approval, antitrust approval, any other such approvals as may be required by law, and other customary conditions. Given these conditions, there can be no assurance that the proposed transaction will be consummated.

Additional information is available on A123's website at www.a123systems.com or by calling A123's Restructuring Hotline, toll- free in the U.S., at 1-800-224-7654. For calls originating outside the U.S., please dial +1 973-509-3190. Court documents and additional information can be found at a dedicated website administrated by the Company's Claims Agent, Logan & Company: www.loganandco.com.

Latham & Watkins LLP and Richards, Layton & Finger are serving as legal advisors, Lazard is serving as financial advisor, and Alvarez & Marsal is serving as restructuring advisor to A123.

About A123 Systems

A123 Systems, Inc. (Nasdaq: AONE) is a leading developer and manufacturer of advanced lithium-ion batteries and energy storage systems for transportation, electric grid and commercial applications. The company's proprietary Nanophosphate® lithium iron phosphate technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density, increased safety and extended life. A123 leverages breakthrough technology, high-quality manufacturing and expert systems integration capabilities to deliver innovative solutions that enable customers to bring next-generation products to market. For additional information please visit www.a123systems.com.

Safe Harbor Disclosure

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that are subject to risks, uncertainties and other important factors, including statements with respect to the expected benefits of A123's proposed asset sale and financing transactions with Johnson Controls, the potential of the transactions and Chapter 11 filing to create value for A123 and its stakeholders, the satisfaction of conditions to closing of the transactions, the anticipated growth of the market for energy efficient vehicles, the expectation that a Chapter 11 filing will enable A123 to sell its automotive and other assets in an orderly manner and maximize value to its stakeholders, and the necessity of bankruptcy court and other approvals, including antitrust and other regulatory approvals, to conduct and complete the transactions and other potential asset sales. Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: failure to obtain required bankruptcy court and other approvals, failure to satisfy the conditions to closing of the transactions, delays in the development of A123's products, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which A123 and Johnson Controls operate, and other risks detailed in A123 Systems' quarterly report on Form 10-Q for the quarter ended June 30, 2012 and other publicly available filings with the Securities and Exchange Commission. All forward-looking statements reflect A123's expectations only as of the date of this release and should not be relied upon as reflecting A123's views, expectations or beliefs at any date subsequent to the date of this release.


Source: A123 Systems

EVTV Friday Show - August 17, 2012

This week:
- Pikes Peak Run
- 1937 Jaguar Electric SUNJAG
- 1974 Electric Super Beetle
- Porsche 944 with A123 battery pack

Jack is showing us some cheap white version battery 

And another destroyed A123 pouch cells pack, overcharged by Jack, left on the side, and it caught fire few days later during the night, unattended of course ... it could have burned down the Escalade or the whole shop ! and Brian is hilarious :-))

The second burned Fisker Karma ...

EV West Team @ Pikes Peak

EV West converted BMW M3

Micheal Bream of EV West shakes hand with Nobuhiro Tajima

The 1937 "Sunjag" in Montana

Another conversion project : Lander Electric

A Porsche 944 conversion using the A123 pouch cells !

EVTV Friday Show - August 10, 2012

This week:

- Electric Cadillac Escalade EXT controller cooling system

- New Electric's electric Glastron boat

- A123 sold to Chinese auto parts supplier

Jack is running the show with his superb copper helmet :-)

Great cooling gear on the table

Great low consumption long lasting pump for cooling

All LiFePO4 Batteries in one spreadsheet

If you want to be able to compare all LiFePO4 batteries available now (SINOPOLY, WINSTON, THUNDER SKY, CALB, GBS, HEADWAY, A123, TURNIGY), here s a great source of information on them:

Source: The Electric Chronicles (a great blog) 

EVTV Friday Show - May 25, 2012

"Hey hey hey, it must be Friday !" says Brian  :-)

Today:

- Cadillac Escalade Inertia Switch, Emergency Disconnect Knife Switch
- A123 13.3v Battery Module Design
- Helwig Brush Testing on Netgain Warp 9 Motor

Talking about the Model S coming out earlier than expected  (Jack has a reservation for one)

Electric Escalade: Jack shows us his simple & effective emergency battery pack breaker: a "knife" switch made of solid cupper bars

Jack is doing some more work of molding a 4s 8p A123 pouch cells battery pack

with liquid plastic and expanding foam 

the result is pretty nice ...

Damned ! Jack blew this brand battery pack by overcharging it ...   :-(

JAck & Brian are back on the test bench for more on the Helwig H60 brushes 

EVTV Friday Show - May 18, 2012

New episode of EVTV released yesterday:

- DC Motor brushes: testing split brush again old regular brush on a Netgain Warp 9
- A123 Battery pack- 7th version

Jack test his 7th A123 LiFePO4 pouch cells module configuation: 8 cells in parallel clamped with 2 of his home made clamping device, and 5 modules will go in the aluminum box

Bottom balancing  and Testing with a programmable automatic charge & discharge device mentionned in previous videos

Testing different brushes on the same motor and with the same battery pack to compare temperature on the commutator, RPM, watt/hour ,etc

The finding is incredible: A 13% gain with new Helwig H60 Red Top brushes compared to the original ones shipped with the motor !

EVTV Friday Show - March 30, 2012

Another episode of EVTV available as of last night

This week:


- Netgain Warp 9 and WarP11 brush issues
- H49 and H60 brush's
- A123's dilemma and the Flatten 'Em series module

EVTV Friday Show is out

Another episode of the great show available as of today

Jack continues his LiFePO4 high power A123 pouch cells configuration testing