A123 welcomes $450M Chinese investment
Officials say a $450 million investment will remove the shroud of financial uncertainty from A123 Systems Inc.
A Chinese firm will invest up to $450 million to stabilize battery maker A123 Systems (Nasdaq: AONE), the company announced in a news release Wednesday.
New A123 investor Wanxiang Group Corp. is China's largest automotive components maker and one of the country's largest non-government-owned companies, according to the news release. The deal represents a large investment in the U.S. auto manufacturing sector for Wanxiang. A123 operates a Michigan battery plant, financed in part by government grants from the state of Michigan and the U.S. government.
A123 had been pursuing "strategic alternatives" since operating problems at its Michigan plant led to faults in batteries it supplied electric vehicle maker Fisker Automotive.
A123 and Wanxiang have a memorandum of understanding worth $75 million in immediate debt financing and extensions worth up to $125 million in additional debt. Wanxiang has warrants to purchase up to $375 million in convertible notes. If Wanxiang provides the entire amount of debt financing and exercises the full amount of its warrants and convertible notes for cash, the Chinese firm's total capital investment in A123 would reach $450 million.
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