Saturday, September 01, 2012

A123 deal with China's Wanxiang would value the stock of $0.55 per share.

Saturday, September 01, 2012
A123?s rallied Commons first about the deal, but since then again dropped. As I write this, the stock has fallen again to $0.48, to only a cent from yesterday's close. The lack of profit confused me, especially since A123?s liquidity problems are the main reason the he has acted on its current depressed to 37% of book value ($1.27 per share).
While regulatory and shareholder approvals have met must be, and some existing convertible bonds repurchased and retired, it seems likely to me that this deal go through. The Government has a track record of paranoia, if it is about the Chinese, regulators have to know that A123 is probably go without a major injection of liquidity is bankrupt and American investors not just on A123?s have been beating doors.

If the business is not blocked, I expect that Wanxiang make the entire investment. Finally, this investment for Wanxiang is almost certainly on the acquisition of A123?s technology and business contacts at a discount, not short-term cash flow. Weiding Lu, CEO which Wanxiang group, said:
A123 provides industry-leading technology for vehicle electrification and grid scale energy storage, as well as strong manufacturing and systems engineering capabilities in Michigan and Massachusetts. We think, that this important synergies with creates Wanxiang, which is involved in this area for 12 years and has strong R & D and this agreement is the first step towards a long-term agreement by which we plan to build on the foundation of manufacturing capacity in China, especially as we continue to expand our strategy of investing in the automotive and Cleantech in the United States, the A123 in the United States has established and help to extend capabilities of the company, both in the domestic and internationally that would create our believe that long-term value for customers, investors and other stakeholders of both companies.

Because I think Wanxiang making full investment, think I the price they are likely to numbers was a good short-term target for AONE. As long as the share price lower than Wanxiang, have an incentive to buy the shares on the open market rather than exercise their conversion option or warrants that should provide price support.
Read the details of the release, is $75 million of investment to a short-term bridging loan, which is not the acquisition of A123 stock resulted. The rest is $200 million in convertible bonds exist (the bearings can be) and $175 million, which can be invested with the exercise of warrants. An exercise of all control of 80% of the company would lead the warrants and the full conversion of the convertible bond of Wanxaing, or about 680 million shares, based had 170 million shares of A123 outstanding July of end of. To do the math and assuming that the initial $75 million bridge loan not used, to share, to acquire the 55 cents per share.

The current price of $0.48 makes a certain sense, but, if the deal is blocked, a stock that should make a beautiful floor under the share price, together with much potential upside signalled his interest in purchasing from A123 at $0.55 Wanxaing, are like the deal A123 new financial stability lead to existing opportunities and new possibilities in China to combat.
It may also be that the conversion price of the notes not the same as the exercise price of the warrants. If this is the case, then some of the expected note conversion or guarantee that exercise would have above happen $0.55 a share, and this in turn would increase the Wanxiang incentive to the share on the open market to buy.

Since I bought all those a little A123, I expect that gather as overcome the various obstacles for this business are. It is still a small investment, because there is still no guarantee that go through the business, and if for some reason, the business is not got, AONE almost certainly his film will continue.
UPDATE: after reading this article, I decided that Petersen is right, and every investment in A123 carefully watching bears. Since I was on vacation, I sold my shares at a small profit.

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Disclaimer: Past performance is not a guarantee or a reliable indicator of future results. This article contains the current opinions of the author and such opinions are non-binding. This article has been distributed for informational purposes only. Forecasts, estimates and certain information contained should not security, strategy or investment as investment advice or a recommendation for a particular product takes into account. Information contained herein is from sources reliable, but not guaranteed won were.

This article first appeared on blog green stocks and AltEnergy of the author, and was republished with permission.
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