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Wanxiang gets court approval to buy A123
Source: Agencies |
December 13, 2012, Thursday
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CHINA'S largest auto parts maker has got US court approval for its purchase of A123 Systems Inc, a bankrupt maker of electric car batteries, but the judge said he was troubled that a US rival might be working to kill the deal.
A123, which was partly funded with US government money, was sold at an auction on Saturday for US$256.6 million to Wanxiang Group of China, which outbid Johnson Controls Inc of Milwaukee.
Johnson Controls has said it remains interested in A123 if Wanxiang fails to get approval from the US government.
"I'm troubled by suggestions that someone who participated in the auction may in fact already be working against it," said Delaware Bankruptcy Judge Kevin Carey at the end of Tuesday's hearing.
Carey ordered into escrow a US$5.5 million fee from the sale that was earmarked for Johnson Controls in return for it being the lead bidder to support the A123 auction. The money will be released when the sale closes or after an investigation by A123 creditors.
William Baldiga of Brown Rudnick, who represents the official committee of unsecured creditors, had told Carey he had a confidential letter that suggested Johnson Controls planned to undermine Wanxiang if the Chinese firm won the bid.
A123 has never turned a profit and received a US$249 million grant from the US Department of Energy to develop lithium-ion batteries.
A department official said on Monday that the grant, which has about US$120 million remaining, would not be transferred to Wanxiang.
Wanxiang has tried to blunt some of the political opposition by excluding A123's defense contracts from its bid.
A123 filed for bankruptcy in October as demand for electric vehicles was lackluster and it was forced to recall defective car batteries. Its customers include Fisker Automotive, General Motors Co and BMW.
If the US foreign investment committee does not approve the sale in the coming weeks, Wanxiang could walk away, although it would forfeit a US25 million deposit that would go toward repaying A123's creditors.
If that were to happen, A123 could then go back on the block.
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