Wilmington, DE --
Wanxiang Group Co., China's biggest auto-parts maker, won approval
from the Committee on Foreign Investment in the U.S. to buy most of the
assets of A123 Systems Inc., the bankrupt electric-car battery maker
backed with U.S. government funds.
Approval from CFIUS, as it is known, was the final hurdle that
Wanxiang needed to overcome to complete the deal. The federal
interagency group led by the Treasury Department was reviewing the sale
after members of Congress expressed national- security concerns over
allowing a foreign competitor to obtain the technology developed with
government backing.
As part of the purchase Wanxiang, based in Hangzhou, China, will get
A123’s cathode powder plant in China and its share of a joint venture
with Shanghai Automotive Industry Corp., called Shanghai Advanced
Traction Battery Systems Co., in addition to the battery technology used
in Fisker Automotive Inc.’s Karma sedan.
Wanxiang, which won bankruptcy court approval of the
acquisition Dec. 11, completed the purchase yesterday, Pin Ni, president
of U.S. unit Wanxiang America Corp., said in an e- mail. Wanxiang
America acquired substantially all of A123’s automotive, grid and
commercial business assets for about $256.6 million. A123 and Wanxiang
tried to mollify congressional anxiety by excluding the battery maker’s
government business from the deal, which was sold to Woodridge,
Illinois-based Navitas Systems LLC for about $2.25 million.
“We’re pleased the government has completed its review
and provided us with the go-ahead to finalize this transaction,” Ni
said in a statement. “The future is bright for A123. It is a company
with exceptional talent and potential, and Wanxiang America is committed
to its long-term success and the continuance of its U.S. operations.”
Deal Scuttled
The Waltham, Massachusetts-based battery maker filed
for bankruptcy in October after a previous deal with Wanxiang was
scuttled amid congressional Republicans’ reluctance to allow its sale to
a Chinese company. A123 listed assets of $459.8 million and debt of
$376 million as of Aug. 31 in court documents.
“Nothing provided by CFIUS has changed my opinion that
the core technology developed by A123,” and the related intellectual
property, “can be separated along A123’s business lines,” said
Representative Bill Huizenga, a Republican representing Michigan’s 2nd
Congressional District, in an e- mailed statement. “American taxpayers
should not be funding technology that will in turn be used in
competition against American companies,” he said, adding that he will
look into legislation to prevent sales of taxpayer-funded “sensitive
technologies” to foreign companies in the future.
Federal Grant
A123, which was awarded a federal grant of as much as
$249.1 million and only used about $132 million to build two plants in
Michigan, held a December auction where Wanxiang beat a joint bid from
Milwaukee-based Johnson Controls Inc. and Tokyo-based NEC Corp.
“The Energy Department’s Recovery Act grant to A123
was used for the construction of brick and mortar advanced battery
manufacturing facilities at two Michigan locations,” Bill Gibbons, a
department spokesman, said in an e-mailed statement. The funds weren’t
used for the company’s research and development of battery technology,
he said.
“The purchase of these assets includes the Energy
Department’s requirement that the plants and equipment partially paid
for by the Recovery Act stay in Michigan and continue to operate,
generating job opportunities for American workers,” Gibbons said.
Joint Venture
Fisker, A123’s main customer, said it was awaiting the
sale of the company’s Michigan plant so it could resume production of
the $103,000 plug-in Karma sedan.
A123, whose automotive business supplies electric-car batteries to about a dozen customers, has facilities in the Michigan cities of Livonia and Romulus.
The grid business focuses on energy generation,
transmission and distribution while the commercial division develops
products for industries such as telecommunications, industrial robotics
and power tools, according to court papers. A123 worked with the
government on portable power solutions, unmanned aerial vehicles, pulsed
power weapons as well as small energy cells for remote devices.
The case is In re A123 Systems Inc., 12-12859, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Copyright 2013 Bloomberg
http://www.renewableenergyworld.com/rea/news/article/2013/01/wanxiang-wins-u-s-government-approval-to-buy-battery-maker-a123
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