A123 Systems and Wanxiang Begin Investment / Semi-Merger
In brief: Financially troubled A123 Systems, a U.S.-based lithium-ion battery maker, is receiving a cash injection from Wanxiang Group, China's largest automotive components manufacturer, in an investment deal that some are saying is a buyout by the Chinese firm.
The agreement is mostly in loans and would include some technology transfers, allowing Wanxiang to sell A123 batteries in Asia. It is not, however, a buyout as most of the money will be delivered as loans rather than payouts.
Initially, A123 will receive $25 million in credit with more coming over time, much of it hinging on conditions. Another $50 million will likely come shortly after the initial credit line with a total of $465 million being offered over time.
At least $200 million of that would be in Senior Secured Convertible Notes, leading some to speculate that this is a de facto buyout rather than a loan arrangement.
And so ...
Regardless, this means that one of the nation's most innovative electric vehicle battery developers will remain in business. A123 Systems had notified its stakeholders that its finances were running dry and would be gone within months at a meeting earlier this year.
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