A123 Completes Financing Deal With Chinese Firm
A123 Systems of Waltham, which has operations in Westborough and Hopkinton, has officially signed a deal with a Chinese firm that will give it majority ownership of the company's stock.
The agreement with Wanxiang Group, one of China's largest, non-government-owned companies, follows a memorandum of understanding announced last week as A123 reported a 53-percent drop in revenue for the second quarter and losses of $82.9 million.
Wanxiang plans to infuse A123 – which makes lithium-ion batteries and energy storage systems for electric vehicles and electric grid operators – with up to $465 million , as long as A123 meets certain obligations. With the investment, Wanxiang would own 80 percent of A123's common stock.
The first part of the investment would be a credit extension of $25 million that A123 expects to receive this week. Another $50 million will be funded after certain conditions are met. The rest of the financing would be done through Wanxiang's purchase of senior secured convertible notes from A123, among other types of investments.
The full investment from the company is meant to provide A123 the necessary capital to strengthen the company's position in the global vehicle electrification and grid energy storage markets, it said.
The Obama administration has drawn criticism over the deal, as A123 has received $249 million in stimulus money from the Energy Department, with $120 million of it yet to be used. Lawmakers and others are now concerned that the deal with Wanxiang will allow millions of U.S. government funding to go overseas and that the Chinese company will take intellectual property and manufacturing jobs with it.
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