A123 Systems: 'No assurance' it can continue to operate

[e-beach]

Why is the common stock bad? Are they merging with johnson? Or are they going to re issue the common stock? What is the timeframe?

This website says it very well...remember "equity shares" = stocks.

http://www.sec.gov/investor/pubs/bankrupt.htm

Snip...
Investors should be cautious when buying common stock of companies in Chapter 11 bankruptcy. It is extremely risky and is likely to lead to financial loss. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens in bankruptcy cases because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their shares are usually subject to substantial dilution.
....snip

Snip...
The bankruptcy court may determine that stockholders don't get anything because the debtor is insolvent. (A debtor's solvency is determined by the difference between the value of its assets and its liabilities.) If the company's liabilities are greater than its assets, your stock may be worthless....snip

Hope this gives you pause! On the other hand, if you want to risk one or two hundred bucks...just know it is a HUGE gamble.

 

[e-beach]

..... but how many stock traders roll the dice on games like that?

Considering 107,891,066 shares traded on Friday, I would say a lot.

 

[Harold in CR]

Latest I read was, Johnson Controls may not GET the stuff they seek. The Chinese are filing law suits, because a Judge said there was security risks with letting them buy into the majority control, even after they offered 4 times what Johnson was told would buy the automotive division of A123. Might just be a bidding war and stocks will jump ??

 

[e-beach]

.... Might just be a bidding war and stocks will jump ??

Highly unlikely. Think what happened to General Motors Corp when they went into bankruptcy. Their common stock was renamed MLTQQ and was traded as MTLQQ.PK until......

The old GM stock traded as MTLQQ on the over-the-counter market until the confirmed bankruptcy plan canceled the shares on March 31, 2011
http://www.freep.com/article/20120408/COL07/204080455/Susan-Tompor-Old-GM-stock-prices-can-be-found

A123's fate will parallel GM to some degree. All A123 common stock will (most likely) be canceled, and if A123 exists on the other side of bankruptcy, new shares will be issued. A conservative investor waits until it is all settled sometime next year, a gambler buys Monday morning hoping it will move from 0.12 to 0.20 and then sells smiling.

 

[arkmundi]

Why is the common stock bad? Are they merging with johnson? Or are they going to re issue the common stock? What is the timeframe?

Nasdaq has delisted them, they are bankruptcy now and their hard capital assets - the factories - have passed into the hands of Johnson Controls. No telling how they will emerge, but many expect they will, from bankruptcy. New management will have to get the reorganized company moving forward. A123 still holds the soft assets - the intellectual property that forms the core of nanophosphate li-ion, so has value. The investment community will have to access what the company is worth. Unknown whether they'll do a second public offering. What's the stock really worth, in true valuation against assets/liabilities?? No one knows, but the market is saying less than a dime.

 

[Punx0r]

but how many stock traders roll the dice on games like that?

Research indicates that on average traders perform no better than chance, and day traders do worse than long-term investors.

 

[hillzofvalp]

Okay... I'm not sure you guys got the facts straight.. but I don't know if I do either. I'm pretty sure the stock is not changing. I saw it peak earlier at 19 cents... insane. pretty sure they have another few months to get to $1.00 before nasdaq will remove them

 

[e-beach]

... pretty sure they have another few months to get to $1.00 before nasdaq will remove them

Maybe, but their is a reason that 'A fool and his money are soon parted'. No serious investor is going to keep investing in AONE knowing it is going to be canceled. It could happen any day depending on how the judge runs his court. Wall Street knows it. That's why it is a penny stock. Main Street and gamblers might want to risk loosing all their bets on it but I for one would say if you want to invest in penny stocks find a business that is not in bankruptcy.

This is not to say that I haven't made money on bankrupt companies. I used to do a lot of day-trading. My accountant told me that my day-trading numbers were the best he had ever seen. Most of the time I would make money, but sometimes emotion got the best of me and I would loose. I once bought 10,000 shares of Worldcom after it went bankrupt. They went from $0.12 to $0.18 in one day. I sold and made about $500 after capitol gain tax and brokerage fees. The next day it went up to $0.25 and I felt it was going to go higher so I bought again. The next day it went way down and I ended up loosing money on the Worldcom deal overall. It never made a big upward move again and slowly sank into oblivion.

I say AONE will follow all other bankrupt companies patterns. In order to get rid of it's debt, the old stocks will be canceled and if they are still a company, and want to go public, they will issue new ones.

I say don't buy AONE unless you want to do some risky day-trading or just have a hankering to throw some money away.

 

[Phoebus]

A123 has never turned a profit and sells an inferior defective product in a weak industry.

There are better investment opportunities out there.

 

[hillzofvalp]

I don't have the money to gamble.. but if I did, it wouldn't be at Las Vegas.. it would be on battery tech. You wait. tomorrow it will be $0.25

 

[jonescg]

http://www.nature.com/news/pioneering-battery-maker-files-for-bankruptcy-1.11646

Even made the front page of Nature website...

 

[e-beach]

Looks like they are trying to keep their employees together for whom ever buys the carcass of A123. Hopefully the link works, if not below is the heart of the article.

Snip....

http://bankruptcynews.dowjones.com/article?an=DJFDBR0020121022e8amkhw6w &r=wsjblog

Patrick Fitzgerald
October 22, 2012
(c) 2012 Dow Jones & Company, Inc.

A123 Systems Inc., the electric car battery maker that filed for Chapter 11 last week after receiving nearly $250 million in government grants, wants to pay more than $4 million in bonuses to a handful of top executives.

The company is asking Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del., to sign off on incentive bonuses totaling up to $4.1 million for nine key employees, including several company insiders---namely, corporate officers and directors---pending the sale of its assets at a bankruptcy auction.

"It is critically important to the success of the sale process that the employees remain with the debtors and be incentivized to produce value," A123's lawyers said Friday in court papers.........The battery maker is also seeking approval of a retention plan for 66 noninsiders of 25% of each of those employees' salaries. The estimated $2.7 million in bonuses is designed to keep those employees from jumping ship before completion of the sales. A123 is also asking Judge Carey for approval of a $6.8 million severance package covering its full-time employees, about 937 people. The company also employs about 770 people in China, according to court filings.

 

[arkmundi]

I say AONE will follow all other bankrupt companies patterns. In order to get rid of it's debt, the old stocks will be canceled and if they are still a company, and want to go public, they will issue new ones. I say don't buy AONE unless you want to do some risky day-trading or just have a hankering to throw some money away.

Right! Mind you, my investment was not in the company, but in the AMP20 cells. Just like the gold crowd - they say there's no protection but actual physical possession of the metal. But gold does nothing except look shinny. I'd rather own viable LiFePO4.

 

[e-beach]

But gold does nothing except look shinny.

Gold was money 5000 years ago, it is money today and when the fiat dollar is a foot-note in history gold will be money still. :wink:

 

[wineboyrider]

But gold does nothing except look shinny.

Gold was money 5000 years ago, it is money today and when the fiat dollar is a foot-note in history gold will be money still. :wink:

+1 Agreed 100% 8) :lol:

 

[Chalo]

When things get so bad that currency fails, steel's going to do you a lot more good than gold. Gold won't transport you, defend you, or help you and nature reach an agreement about feeding yourself. It's a primitive fascination; you might as well put your faith in diamonds or pearls.

 

[wineboyrider]

When things get so bad that currency fails, steel's going to do you a lot more good than gold. Gold won't transport you, defend you, or help you and nature reach an agreement about feeding yourself. It's a primitive fascination; you might as well put your faith in diamonds or pearls.

True for the peasant class, but not if you want too flee the tyranny. The wealthy Jewish families fled Nazi tyranny with Gold! Real goods though in a currency collapse are all that matter. I remember going to college with a Macedonian student name Niko whose family survived the Yugoslavian currency collapse by purchasing car loads of vodka in neighboring countries. His family could then use the vodka as currency for bartering.....

 

[neptronix]

When things get so bad that currency fails, steel's going to do you a lot more good than gold. Gold won't transport you, defend you, or help you and nature reach an agreement about feeding yourself. It's a primitive fascination; you might as well put your faith in diamonds or pearls.

Tell that to the large banking institutions that are hoarding it right now en masse.
Tell that to JP Morgan, who will now accept gold as collateral. They won't accept diamonds or pearls.
Tell that to the people who maintain their wealth after currencies and countries collapse.

Gold is more valuable and rare than anything else. It is easy to transport and conceal. That is why it is the best investment. A pound is worth ( as of writing ) $26,400. You could carry enough of it to start a life in another country inside your shoes or concealed away otherwise. You could could have a million US dollars worth of gold in your glove box or underneath the seat of your car. It is highly portable and worth a lot of money in every country.

Gold has been valued for thousands of years, and through hundreds of different civilizations. Gold *is* money. Dollars are invented debt repayment notes and are only currency because this country collectively make-believes that the dollar is worth something. Would you accept a east German mark or Soviet ruble as a form of payment? what about a pre-euro European currency? Not worth anything, you say?

Could you melt a dollar down and turn it into another currency? :lol:

Gold is a fantastic conductor, is extremely rare, looks flashy, lasts an extremely long amount of time, and only gets more valuable over time. Dollars go down in value, can be printed arbitrarily, and could cease to hold value at any moment.

http://www.nma.org/pdf/gold/his_gold_prices.pdf

Look at this gold price to dollar history chart. I feel like punching myself in the face knowing that i could be very very rich if i had bought gold in 2000 & sold now, or even held on to my gold for decades. You could be too.

 

[Chalo]

When things get so bad that currency fails, steel's going to do you a lot more good than gold. Gold won't transport you, defend you, or help you and nature reach an agreement about feeding yourself. It's a primitive fascination; you might as well put your faith in diamonds or pearls.

True for the peasant class, but not if you want too flee the tyranny. The wealthy Jewish families fled Nazi tyranny with Gold! Real goods though in a currency collapse are all that matter. I remember going to college with a Macedonian student name Niko whose family survived the Yugoslavian currency collapse by purchasing car loads of vodka in neighboring countries. His family could then use the vodka as currency for bartering.....

Those Jewish families also brought their diamonds and pearls. But fiat currency was still working at that time, which is why gold, diamonds, and pearls were still valuable. To assume a worthless dollar is to assume more extreme circumstances than existed during the Holocaust or WWII.

Vodka is a fine example of what I'm talking about. When the chips are down, vodka beats gold because vodka is much more useful. Copper will help you make vodka if you want to, but gold won't.

 

[neptronix]

Sure, i get what you're thinking - you're thinking about useful things and an even worse case scenario than i see. I don't see the collapse of civilization occurring and never coming back - but if you are banking on that, then gold might seem less appealing.

Where gold shines is that it's very small and portable. If you wanted to take your wealth from one country to another, that's how you'd do it.

Copper is useful but so is Silver. Silver can be used as a very strong antibiotic. It also gains value like gold does. Copper will oxidize and tarnish over time. Gold and Silver don't do that so much.

If you want to stay in one place and don't see yourself leaving the country, then yes, big heavy stuff is a good investment. Cows, guns, useful metals, all that stuff. Think Oregon trail

 

[Punx0r]

Assuming gold loses it's intrinsic value (say, in electronics) you'd likely still be able to trade with it. Either because it will become the arbitrary currency of the moment (just as in history), or because people will take it in the expectation that it will become hugely valuable again once the Crisis is over.

If the shit is really going to hit the fan then you should probably hoard long-life food and guns...

 

[Chalo]

Where gold shines is that it's very small and portable. If you wanted to take your wealth from one country to another, that's how you'd do it.

I understand that's how Iran is coping with economic sanctions at the moment-- selling oil to Turkey for lira and buying gold, then bringing the gold back to trade for other things.

The implications of US dollars being reduced to the same state of illiquidity as today's Iranian rials is that many more global economic mechanisms would be broken, and there may be no better place to run to anywhere. One day, the global economy may not depend on dollars, but today they are just a fact of life.

Gold is more universally valued than dollars or euros, but it's not much more intrinsically useful than banknotes-- at least in the quantities a normal person is likely to possess. So its value still hinges on an economy that functions at some level. I believe that like swords or horses, gold's days as a pillar of power and order in the world are numbered. (Gold can still be exchanged for sex more readily than those other two.)

If you want to stay in one place and don't see yourself leaving the country, then yes, big heavy stuff is a good investment. Cows, guns, useful metals, all that stuff. Think Oregon trail

 

[wineboyrider]

It's not about gold this or copper that it's about real goods in a currency collapse. The currency collapsed in Germany under the Weimar republic and their answer was Hitler. There are already street gangs in the US that use laundry soap as currency to trade and hoard....
lol

 

[arkmundi]

My appologies for inserting the words "gold" and "shinny" into a conversation about A123. I just meant that what I hold onto are the things that have value to me. So holding A123 stock, that seems to be on a continuing downward slide, is of no value. My interest in the company and its coming out of bankruptcy with a continued ability to deliver battery tech to the EV and LEV markets, is all about nanophosphate LiFePO4. Holding viable cells is more worthwhile than holding other metals, including gold. Don't know whats in store for the economy, the USD, currencies etc. This much we do know - the price of petroleum, and therefore gasoline and all else that is made of petrochemicals, will continue to increase in price relative to other commodities. Therefore its sage advise to invest in the emerging LEV transportation alternative. Besides, its fun.

 

[liveforphysics]

Investing in an outdated cell tech with finite shelf life (as they all do), seems like not the best strategy for a long term physical asset investment.

Gold/Silver/Iridium/Platnium/Rhodium/Paladium at least doesnt become worn out in a decade of sitting on a shelf.

Just my $0.02