Wanxiang wins the U.S. Government approval buy battery manufacturer A123

Approval from CFIUS, was the last hurdle that had to be overcome in order to conclude the transaction Wanxiang, as he is known. The Federal Interagency Group, led by the Treasury Department was selling review, after members of Congress allow national security concerns to get a foreign competitor with State protection technology developed.

Wanxiang, the bankruptcy court approval of the acquisition Dec. 11 completed who said in an e-Mail yesterday, pin NI, President of the US unit Wanxiang America Corp., buying won,. Wanxiang America, the A123s purchased automotive, grid, and commercial assets for approximately $256,6 million. A123 and Wanxiang tries to placate Congressional anxiety by excluding the battery manufacturer Government shops out of the deal at Woodridge, Illinois-based Navitas Systems LLC for about 2.25 million $ was sold.
"We are pleased the Government has completed its review and has with us the go-ahead to this transaction complete," NI said in a statement. "The future is bright for A123. It is a company with extraordinary talent and potential and Wanxiang America is committed to its long-term success and the continued existence of their U.S. operations."

Thing itself sunk
The Waltham, Massachusetts-based battery manufacturer bankruptcy in October after a previous agreement with Wanxiang in the midst of Congressional Republicans allow reluctance, sale to a Chinese company sunk has been filed. A123 listed assets of $459,8 million and debt of $376 million status: Aug. 31 in court documents.

"Provided by CFIUS has nothing my opinion after changing the core technology from A123, developed" and related intellectual property "be separated fields of business can along A123s" said representative Bill Huizenga, a Republican who represent Michigan 2nd Congressional District, in an e - sent statement. "American taxpayers not technology, which in turn are used to compete against American companies should be medium", he said, adding that he in the legislation funded "sensitive technologies" for foreign companies in the future to prevent search sales by the taxpayer.
Federal grant

A123, received a federal grant of more than $249,1 million and only $ 132 million $ for two plants in Michigan, instead of a December auction where Wanxiang beat a joint bid by Milwaukee-based Johnson Controls Inc. and Tokyo-based NEC Corp.
"The Department of energy recovery Act grant for A123 was used for the construction of brick and mortar advanced battery production facilities at two sites in Michigan," Bill said Gibbons, a spokesman for the Department in one via e-Mail statement. The funding for research and development of battery technology of the company used were not, he said.

"With the purchase of these assets of the Department of energy request, which includes the equipment and devices that are part of stay paid in Michigan Recovery Act and continue to operate," generating job opportunities for American workers, Gibbons said.
Joint venture

In the context of the purchase, Wanxiang get seat in Hangzhou, China, A123s, plant in China and its stake in a joint venture with Shanghai Automotive Industry Corp., Shanghai advanced traction battery systems co. called cathode powder used in addition to the battery technology in Fisker Automotive Inc. Karma sedan.

Fisker, A123s main customer, said that it was expected the sale of the company's Michigan plant, so it plug production of the $103,000 - sedan could resume in karma.
A123, whose automotive-Geschaft delivers electric car batteries in about a dozen customers, has facilities in Michigan cities of Livonia and Romulus.

The grid business is focused on power generation, transmission and distribution while the commercial Division develops products for industries such as telecommunications, industrial robotics and power tools, according to the court papers. A123 has worked with the Government on portable power solutions, unmanned aerial vehicles, pulsed power weapons, as well as small energy cell for remote devices.
The case is in terms of A123 Systems Inc., 12-12859, U.S. bankruptcy court, district of Delaware (Wilmington).

Copyright 2013 Bloomberg

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

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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