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

[Jeremy Harris]

Bold words, and I'm sure that they are well meant, but what the heck are the US Government going to do if no suitable US buyer comes forward?

My guess is that reality will intervene and a sale to pretty much anyone would be agreed before too long.

 

[arkmundi]

Its a place your bets moment. The Wanxiang Group seems best fit to A123 capital needs, but lacks support of the US DOE. Johnson Controls, long term would be well suited to making & selling batteries, as A123 was intended, to a broad constituency making ecars & LEVs, but only wants the automotive division and is unwilling to pay an amount equivalent to A123's creditor needs. Siemens is in the bidding, but it is unknown for how much, as their bid is still sealed and they have not disclosed. There are perhaps up to 20 other bidders in the mix. If you guess right and can substantiate it here, before Thursday morning 8 AM EST, I will send you a framed A123 AMP20 cell!

 

[Jason27]

Give em a bailout like GM, Goldman Sachs, AIG

Have them pay it back later

 

[arkmundi]

Give em a bailout like GM, Goldman Sachs, AIG Have them pay it back later

The political will for any more bailouts is quite low. On that subject, however, the American people were largely favorable to bailouts for the auto industry, but not so for the investment banking firms that got those monies. AIG was the worst of the worst. Remember "too big to fail?" as in it has to exist for the economy to survive? How'd we get there anyway? Too big is the problem. Why would we not let it fail and rebuild from scratch? That's what Iceland choose to do and in retrospect, their policy has proven to be the right one.

No, no more bailouts. Period. But, I continue to be supportive of the DOE's grant making, as in getting new promising tech companies up & running, as with A123. Should they grant more? NO - some startup funds only at startup time, then done. If it fails, it fails, as it did with A123. Then let the parts be scavenged by the likes of Johnson Controls. The grant monies in that case are still worth the expense on the behalf of the American taxpayer. Even Wanxiang has a substantive presence in America. It gets a new technology like nanophosphate closer to economic sustainability in the long term.

 

[arkmundi]

Companies, politicians jostle in U.S.-China bids for bankrupt battery maker; By Thomas Content of the Journal Sentinel

In addition, last week, Johnson Controls was named one of four industrial partners with Argonne National Laboratory as well as other national energy labs in a $120 million research hub devoted to developing breakthrough battery technology.

“Johnson Controls believes it is important to secure the A123 intellectual property and technology that serve as the foundation for all of the markets served by A123,” Johnson Controls said. “The company is committed to preserving the U.S. lead in advancing energy efficiency technologies, serving the dynamic global advanced battery market, including the U.S. military and energy grid, and continuing to create jobs in the United States.”

My bet is that the stars are aligning around Johnson Controls and that they will win in their bid over others, primarily because of continued US DOE support.

 

[Ctesibios]

Looks like it could take some time before the sale gets done!

http://www.chicagotribune.com/class...tcy-auctionbre8b5182-20121206,0,3425696.story

 

[arkmundi]

Well, there it is then...
Wanxiang wins auction for assets of battery maker A123

A source close to the deal said the purchase price was about $250 million. Wanxiang excluded from the purchase A123’s U.S. government and military contracts. The idea behind that move was to blunt concerns raised by politicians and a military group that that sensitive technology was slipping away from the U.S. and into foreign hands. Another company, Navitas Systems, a spinoff of MicroSun Technologies, purchased those assets, he said.

 

[Chalo]

That's a lot of purchase cost to amortize. It must look better to them than it does to me.

 

[Jeremy Harris]

Well, there it is then...
Wanxiang wins auction for assets of battery maker A123

A source close to the deal said the purchase price was about $250 million. Wanxiang excluded from the purchase A123’s U.S. government and military contracts. The idea behind that move was to blunt concerns raised by politicians and a military group that that sensitive technology was slipping away from the U.S. and into foreign hands. Another company, Navitas Systems, a spinoff of MicroSun Technologies, purchased those assets, he said.

It seems that my earlier post may have been a bit prophetic:

Bold words, and I'm sure that they are well meant, but what the heck are the US Government going to do if no suitable US buyer comes forward?

My guess is that reality will intervene and a sale to pretty much anyone would be agreed before too long.

 

[flathill]

Flathill that was a mad load of information! if you had the energy to read all that info, it would have made sense to spend 5 minutes summarizing what it all meant and giving us excerpts and link...

The first post tells A123 were well aware of danger of doing business in China.

The second post explains why they didn't care. The founder from Taiwan setup the first 5 factories in his dad's home town in China not Taiwan. A123 plainly states "we ended up having to teach these guys how to make our state-of-the-art, world-class batteries...And some of them are [now] competing with us directly." Research Taiwan-China relations to see how this doesn't make sense. Now ask yourself if the USA plant was sabotaged.

A123 is going bankrupt as I predicted and the IP will be sold off to a Chinese interest (like Evergreen solar also MIT tech).

The stock is down 14% today [class action shareholder lawsuit, they did not disclose the "mis calibrated" laser welder at the USA plant until the insiders could sell their shares, using the recent Consumer Reports story coverage on Fisker as cover, even though Victpower has been defective (1 in 4 may have a problem if compressed) USA cells for months meaning they knew of the problem before looking at the Consumer Reports car a few weeks ago] and is under a dollar so it will soon be delisted. From the spaceship earth citizen perspective it means cheaper batteries and you shouldn't really care unless you are uncomfortable with China being the only superpower when the dollar collapses. From a USA citizen perspective, your tax dollars are funding research that ends up benefiting foreign countries more than the USA.

It is sad to say but this is probably the best outcome. When you can head down to walmart or your local auto parts store and pick up outdated but awesome a123 generic chinese cells we will all be better off

 

[SamTexas]

250M for a company with a 12M market value!

Hopefully the new owner is able to turn this company around, but more importantly will decide to sell its current and future products to everyone willing to pay so we don't have rely on the grey market and its questionable reputation.

 

[e-beach]

So aren't you glad you didn't gamble on A123 after bankruptcy and buy that stock? :wink:

A123's Story Ends With A Zero
http://www.investopedia.com/stock-a...eq-jci-byddy-gm-bldp1212.aspx?partner=YahooSA

Snip.....
With the Chapter 11 bankruptcy auction of defunct battery developer A123's (OTC:AONEQ) commercial assets now complete, the story is over and common shareholders will walk away with a total loss. Not only does the A123 story serve as a bitter reminder of the sizable hurdles that new energy-tech companies must face, but also the dangers of buying into the hype at the cost of scientific and economic realities. ....snip

Snip....
Assuming that the bankruptcy judge approves the transaction (and there's little reason to expect otherwise), the deal will go through. Unfortunately for shareholders, A123 went into bankruptcy with about $376 million in liabilities and between the Wanxiang bid and a trivial amount agreed to in a separate deal for A123's military/government-related assets, there will be over $100 million in net liabilities left, meaning that shareholders will get absolutely nothing in the liquidation....snip

 

[GCinDC]

So aren't you glad you didn't gamble on A123 after bankruptcy and buy that stock? :wink:

yes.

i put $1000 on them when the stock was at $22 several years ago, but finally sold at $2, and then w/ the price at 0.17 i confess that i did think about it again...

 

[Icewrench]

Under 2 cents a share now at $0.0181 that comes out to less than a hundred bucks for 5000 shares.

Yes it may well be a losing bet, and it will not be the first one for me.

 

[e-beach]

Under 2 cents a share now at $0.0181 that comes out to less than a hundred bucks for 5000 shares. Yes it may well be a losing bet, and it will not be the first one for me.

The company is being sold off and the stock is worthless. Please do some research on what happens to a common stock when a company goes into bankruptcy. After your research, if you then still feel like dumping a "benjy" into someone else's hands for no good reason except to loose money, PM me and I can give you a mailing address so you can send it to me.

Ps. http://www.ehow.com/facts_5980979_happens-stocks-bankruptcy.html

 

[USAEBIKECO]

People are still trading the stock, i have no idea why..

AONEQ

 

[e-beach]

People are still trading the stock, i have no idea why.. AONEQ

Because it is not illegal to trade stocks that are in bankruptcy. It is a free-for-all between the gamblers, computer trading, people who are hoping to get pennies on their dollars invested and those who jump in because the price is low and can't stand the emotional temptation of such a low price. Letting emotion dictate stock purchases / sales will leave you loosing money every time.

BTW, It looks like the Chinese are going to Washington DC.

 

[e-beach]

Wanxiang learns to do it the American Way...Lobby the politicians... :lol:

http://bankruptcynews.dowjones.com/...cle?an=DJFDBR0020121231e8cvi2xrt%20&r=wsjblog

A123 Creditors Seek to Hire Lobbyists to Advance Sale

Rachel Feintzeig
December 31, 2012
(c) 2012 Dow Jones & Company, Inc.

Creditors of A123 Systems Inc . are seeking to hire a lobbying firm in an attempt to stop political forces---including opposition from the battery maker's "jilted stalking horse bidder"---from derailing a $256.6 million sale deal.

The official committee of unsecured creditors wants court permission to bring on Capitol Counsel LLC, whose professionals are "among the most seasoned lobbyists in Washington," according to the committee, as it seeks to ensure a sale that recently won a bankruptcy judge's blessing remains intact.

The U.S. Bankruptcy Court in Wilmington, Del., on December 11 cleared A123, a government-backed battery maker that has yet to turn a profit, to sell most of its assets to China's Wanxiang America Corp. The proposed buyer beat out rival bidder and stalking horse Johnson Controls Inc. at auction, but the fight for the assets didn't end there. The sale to Wanxiang remains subject to the approval of the Committee on Foreign Investment in the United States, a government body led by Treasury Secretary Timothy Geithner that reviews deals that could result in the control of a U.S. business by a foreign person or company.

In its filing, made Friday, the creditors noted that "considerable political pressure has been raised" against the government committee's approval of the sale.

Lawmaker opposition killed Wanxiang's prebankruptcy attempt to get control of A123, and Republican senators Chuck Grassley of Iowa and John Thune of South Dakota have continued to criticize the Wanxiang bankruptcy takeover. Meanwhile, "jilted stalking horse bidder" Johnson Controls "has hired a seasoned political lobbyist and, upon information and belief, is doing everything within its power to encourage CFIUS to deny approval of the proposed sale to Wanxiang," the creditors said.

An attorney for Johnson Controls wasn't immediately available for comment Monday, nor was an attorney for A123.

With the Committee on Foreign Investment process looming large, the creditors say they need a lobbyist on hand, too. They've selected Capitol Counsel to provide services including "political and policy intelligence gathering and analysis" and possibly "direct advocacy before Congress."

The lobbying firm would be entitled to a flat fee of $75,000 plus expense reimbursement, should a bankruptcy judge approve the employment request. The creditors called the compensation structure "competitive and appropriate."

U.S. Bankruptcy Judge Kevin Carey is set to consider signing off on the creditors' bid at a hearing Jan. 15.

A maker of batteries for electric cars, among other things, A123 built its business with the aid of nearly $250 million in government assistance. The company drew down about $133 million of a loan from the Department of Energy before it filed for bankruptcy in October.

A123 entered Chapter 11 with a $125 million stalking horse, or lead, offer for its automotive business from Johnson Controls . But a unit of Wanxiang Group , whose $465 million offer for A123 collapsed this fall after it encountered opposition from lawmakers, outbid the Milwaukee auto-parts manufacturer at auction.

While the final sale price more than doubles Johnson Controls 's initial offer, it won't be enough to provide a recovery to the battery maker's shareholders, who will be wiped out under the deal.

The company's sale to Wanxiang drew concerns from lawmakers who feared that some of the government-backed company's military contracts and taxpayer funded technology could wind up in the hands of a foreign buyer.

To address those concerns, Wanxiang didn't seek to buy A123's government business. A123 instead won court approval for a separate sale of that unit, to Chicago's Navitas Systems for $2.25 million.

Johnson Controls earlier this month said the Wanxiang sale still raises "national security questions" due to the "core technology" it says is used across A123's business units. In a statement from a company executive, it said the risk can't be dismissed until after the government review. Should the deal not pass the government's muster, Johnson Controls said it would be waiting in the wings.

The thwarted buyer also recently appealed the battery maker's sale to Wanxiang in an attempt to get the bidder protections to which it says it's entitled.

 

[arkmundi]

The rules for the bankruptcy proceedings were agreed on in advance. Wanxiang won the bid. Its more American the "Chineese" if you look under the covers. Their $256M bid excluded the government contracts, so as to appease the naysayers. A123 wants the bid to go to Wanxiang. But ohhhh nooooo.... Johnson Controls it seems has friends in high places and its not ready to lay down. So lets take the bidding process out of the courts where it belongs and put it on Congress. Just where is American capitalism when you need it? What a frackin drama.

 

[Icewrench]

up 9.39% today !
Still will not cover the cost of the trade.
I went for a play on the political intrigue and the end of the tax year sell off for those that wanted to get out.
There really should not be any political intrique since all of my big prismatic cells already say made in Korea on them.
If this dead cat bounces a penny or two higher then I will run for the exit.

That`s my 2 cents

 

[e-beach]

If this dead cat bounces a penny or two higher then I will run for the exit.
That`s my 2 cents

The

If you can cover you trade, man...jump out like a cat out of a bag because 2 cents higher is straight luck!

Anyway, I hope you can do it.

That's my 2 cents

 

[e-beach]

So why the lobbyists?

http://finance.yahoo.com/news/strategic-materials-advisory-council-reaffirms-214700659.html

WASHINGTON--(BUSINESS WIRE)--

The Strategic Materials Advisory Council (“the Council”) released the following statement regarding the pending sale of A123 Systems to Wanxiang Group Corporation:

“The Council continues to call on the Committee on Foreign Investment in the U.S. (CFIUS) to carefully scrutinize the sale of A123 Systems to Wanxiang. Supporters of the sale have attempted to allay our concerns and those of dozens of Democratic and Republican Members of Congress by downplaying the criticality of A123’s technology. Their arguments contend that A123’s technology can be segregated by application; we continue to assert that these claims are questionable, and the pending sale poses a long-term threat to American economic and national security. Just one example of those concerns is the fact that the Pentagon would still rely on Wanxiang’s technology and supply chain for future U.S. military operations and equipment, even though the company did not acquire A123’s government contracts business.

A123’s Lithium Iron Phosphate (LFP) Nanophosphate EXT is a breakthrough technology that is far more advanced than any known existing LFP alternative. The imminent decision by CFIUS on the sale will decide the fate of a technology that would enable the United States to remain an important player in twenty-first century power grid, satellites, and countless defense systems. We urge CFIUS members and all U.S. government leaders involved in the review to carefully consider the implications of this technology loss.”

A description of the Council’s technical rebuttal is available here.

About the Council

The Strategic Materials Advisory Council is a coalition of former U.S. Government leaders and industry experts who have significant experience with strategic and critical materials through decades of service in the public and private sector. The Council was formed with the clear objective to promote policy solutions that ensure continued access of both U.S. industry and military to those materials needed to support a robust 21st century economy and military.

 

[Jason27]

So has the sale to wanxiang went through yet or is it still pending congress?

 

[arkmundi]

So has the sale to wanxiang went through yet or is it still pending congress?

Its pending approval of the Treasury Department's Committee on Foreign Investment. So Congress has little influence. Treasury reports to the President. At best lobbyist-->Congress criters-->President-->Secretary of the Treasury-->the bureacrats-->report-->Committee-->Secretary-->President. Yea, Obama has the power to veto at anytime. It always pays to have friends in high places.

 

[e-beach]

http://www.reuters.com/article/2013...0129?feedType=RSS&feedName=marketsNews&rpc=43

UPDATE 1-Chinese firm wins A123 despite U.S. tech transfer fears

Tue Jan 29, 2013 9:29am EST

* Electric car battery maker A123 funded by U.S. government
* U.S. foreign investment committee approves purchase -source
* Deal excluded defense contracts
* Wanxiang has history of investing in United States

By Tom Hals and Ben Klayman Jan 29 (Reuters)

China's largest auto parts maker won U.S. government approval to buy A123 Systems Inc, a bankrupt maker of electric car batteries that was funded with U.S. government money, a source familiar with the situation said on Tuesday.

A U.S. government committee on foreign investment approved the sale of the lithium-ion battery maker to Wanxiang Group, according to the source, who asked not to be identified because they were not authorized to speak publicly.

Some members of Congress and retired military leaders said the sale to Wanxiang would transfer sensitive technology to China and they asked the U.S. committee to block it.

A123 filed for bankruptcy in October due to weaker-than-expected demand for hybrid vehicles and technical problems. The company had received a $249 million grant from the U.S. government to promote clean energy, although about half of that money as never used.

The company was sold in December at an auction supervised by the U.S. Bankruptcy Court in Delaware. Wanxiang's bid of about $257 million won against U.S. rival Johnson Controls Inc of Milwaukee.

The money raised in the auction will be used to repay the battery maker's debts of about $376 million.

Wanxiang tried to blunt criticism of the deal by excluding A123's defense contracts from its bid at the auction. Those were sold separately to Navitas Systems for $2.25 million.

Chinese firms have been pouring cash into overseas investments, and with that money has come concerns around the globe that companies with ties to Beijing may not play by free-market rules.

The Committee on Foreign Investment in the United States, or CFIUS, which approved the sale to Wanxiang, recently rejected a bid to build wind farms in Oregon by Ralls Corp, owned by two executives of China's Sany Group. The committee has also blocked multiple deals by Huawei Technologies Co, a Chinese telecom equipment manufacturer.

Wanxiang may have soothed the concerns of CFIUS members with its history of investing in the United States.

The company generates about $1 billion in U.S. revenue by supplying parts to General Motors Co and Ford Motor Co . It has bought or invested in more than 20 U.S. companies, many of them which were in bankruptcy, according to a Congressional report.