US electric car battery maker, A123 Systems has won court approval to seek bankruptcy protection after it missed a payment for a $2.7 million in loan interest on October 15.
The firm, which makes lithium iron phosphate batteries for the Fisker Karma, won approval to borrow as much as $15.5 million from Johnson Controls as the firm sells of its assets.
According to Bloomberg.com, US Judge Kevin Carey approved the financing at a hearing this week in Wilmington, Delaware, after Johnson Controls cut the interest rate to 13.5 per cent from 15 per cent.
A123 Systems, which received a $249 million in Department of Energy stimulus funds in 2009, will now sell its automotive division to Johnson Controls as its heads into Chapter 11 bankruptcy protection.
Back in August, the Massachusetts based firm revealed that it had agreed a deal with the Chinese auto parts firm Wanxiang Group Corp (see story) for funding in return for a majority ownership stake. But A123 Systems decided that scrapped the deal in favour of bankruptcy.
The deal with Johnson Controls is valued at $125 million.
"We believe the asset purchase agreement with Johnson Controls, coupled with a Chapter 11 filing, is in the best interests of A123 and its stakeholders at this time," said David Vieau, Chief Executive Officer of A123. "We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion. “
"Our interest in A123 Systems is consistent with our long-term growth strategies and overall commitment to the development of the advanced battery industry," said Alex Molinaroli, president, Johnson Controls Power Solutions. "Requirements for more energy efficient vehicles continue to increase, which is driving automotive manufacturers to pursue new technologies across a broad spectrum of powertrains and associated energy storage solutions. We believe that A123's automotive capabilities are a good complement to our existing portfolio and will further advance Johnson Controls' position as a market leader in this industry."
Faye has been writing about cars and environmental issues since 2007. A suspected eco-warrior working on the corporate inside, Faye mainly likes the weird, quirky vehicles that show a distinct environmental advantage. Her ideal car has enough room to fit a bale of hay in the boot. When not working, she likes nothing better than to head out on her bicycle and explore the countryside.
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