A123 Systems: Green Energy Company Approved For $249 Million In Stimulus Funds Goes Bankrupt
A123 Systems, a green energy manufacturer that was approved for $249 million in taxpayer funded stimulus grants, filed for bankruptcy on Tuesday. The company made electric car batteries and was based in Waltham, Massachusetts. A deal to turn over control to a Chinese firm fell through; Johnson Controls will now buy the assets from the failed business for $125 million.
The proposed deal with Wanxiang Group included a $450 million investment in exchange for gaining control of 80 percent of A123 Systems. Some business analysts predicted that, if the Chinese company’s tentative offer went through, the manufacturing plants would likely be moved overseas.
David Vieau, the CEO of the electric vehicle battery company, had this to say about the demise of the business:
“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. We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion.”
The Obama administration approved the Massachusetts company for a $249 million grant three years ago, according to Bloomberg Businessweek. The grant and tax credits were reportedly offered with the hope that jobs would be created and viable clean energy alternatives achieved, according to Fox News.
Department of Energy spokesman, Dan Leistikow, had this to say about the electric vehicle battery manufacturer:
“A123, which has been building batteries for electric vehicles as well as for the nation’s power grid, quickly established itself as an innovative player in the market. Today’s news means that A123’s manufacturing facilities and technology will continue to be a vital part of America’s advanced battery industry.”
The company listed its assets as $459.8 million and debt at $376 million in Chapter 11 filing documents. The batteries supplied for the high-end Fisker vehicle reportedly caused more fiscal struggles for the manufacturer.
Mitt Romney campaign spokeswoman, Andrea Saul, had this to say about the company closure:
“A123’s bankruptcy is yet another failure for the president’s disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work.”
The business has drawn approximately $129 million of the federal stimulus grant so far, recalled its products, and laid off workers. A123 Systems’ stock price fell from $4.44 to 6 cents this week.
