A123 expresses 'doubt' in future, loses main line of credit
The Massachusetts-based lithium-ion battery maker said in a May 30 filing with the U.S. Securities and Exchange Commission that it expressed "doubt" over being able to continue after recent hiccups that included a loan restructuring and product recall.
A123, whose customers include General Motors and Fisker, said its line of credit from its lead bank was eliminated earlier that month and replaced by $15 million worth of letters of credit. In late March, A123 took a $51.6 million charge because of the need to replace cells made at its Michigan plant that ended up in some Fisker Karmas.
"These matters along with the Company's historical net losses and negative operating cash flows raise substantial doubt about the Company's ability to continue as a going concern," A123 said in the filing.
In May, A123 said its first-quarter loss more than doubled to $125 million from a $53.6 million loss a year earlier – primarily because of the recall and the need to replenish inventory – while revenue fell 40 percent to $10.9 million.
A123 was founded in 2001 as a Massachusetts Institute of Technology spin-off and went public in September 2009. This year, the company, which has received U.S. Department of Energy funding, won battery-making contracts with BMW, Tata and Via.
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