A123 Systems, a corporate venturing-backed and Nasdaq-listed lithium-ion battery maker, has filed for bankruptcy after failing to receive money from a potential acquirer.
In August, China-based auto parts group Wanxiang agreed to invest up to $465m in A123, with the potential of acquiring up to 80% of the company in return, but A123 failed to receive the first tranche and entered bankruptcy proceedings.
A123 also said it would sell its assets to US-based industrial group Johnson Controls for $125m and has agreed to provide A123 with $72.5m in debtor in possession financing which would allow the company to keep operating during the bankruptcy proceedings.
However, news provider Boston Globe said lawyers for Wanxiang appeared in A123’s bankruptcy court Thursday to reaffirm the Chinese group’s interest in buying the US battery company.
A123 has been a corporate venturing investor in its customer, Fisker Automotive, but its battery malfunctioned in a test for the electric car maker and so its sales have fallen this year partly as a result and it needed to raise money and so in August turned to Wanxiang.
Wanxiang at the time said it would provide A123 with up to $75m in initial debt financing under a senior secured bridge facility and purchase $200m aggregate principal amount of A123’s senior secured convertible notes with a 6% yield as against 3.75% for the existing convertible loan notes issued by A123 to investors.
Wanxiang could also invest up to an additional $175m if it exercises the warrants that would be issued in connection with the bridge facility and the convertible notes for cash to give it 80% of A123’s common stock.
The final $50m in loans would await regulatory approval.
A123 was awarded a $249m grant by the US Department of Energy in 2009 and so far has received about half of the funds.
A123 floated just four months after it secured this government grant and its initial public offering (IPO) was the largest of 2009.
At the time of the grant, A123 claimed to have raised more than $350m in equity from private investors, which would include corporate venturing funds representing semiconductor and telecommunications corporation Qualcomm, energy conglomerate General Electric, telecommunications company Motorola and consumer health and wellness conglomerate Procter and Gamble.
In November last year, A123 Systems built on its partnership with Japan-based industrial equipment manufacturer IHI by licensing its battery technology to IHI in return for IHI investing $25m in A123.