China's largest automotive parts supplier, Wanxiang Group Corp, is proposing to acquire a controlling 80-per cent stake in struggling US battery maker A123 Systems for $450 million.
A123 Systems, which received a $249-million green-technology grant from the US government in 2009, yesterday said that it has signed a non-binding financing agreement with Wanxiang and expects to conclude an agreement soon.
Under the proposed agreement, Wanxiang would give A123 as much as $75 million in debt financing, may buy $200 million of senior secured convertible notes and invest $175 million by exercising warrants.
A123, which spent 60 per cent of its cash reserves in the last quarter and only had enough left for the next four to five months, said that the agreement would remove the uncertainty regarding its financial situation and help it through the next several months.
"A substantial capital investment from Wanxiang would not only provide financial stability to A123 as we continue to grow, but it would also align us with a large, successful global brand in the automotive and cleantech industries.
"Wanxiang has a successful track record of operating in the US with significant employment and commitment to good corporate citizenship, and we expect that a strategic agreement with Wanxiang would help enhance our competitive position in the global marketplace, especially in China," said David Vieau, CEO of A123.