A123, Wanxiang deal under scrutiny by Republican Senators
Two US Senators want the Committee on Foreign Investment in the United States (CFIUS), led by Treasury Secretary Timothy Geithner, to review an acquisition deal to make sure military and taxpayer interests in A123 are protected. China's Wanxiang Group Corp. wants to acquire bankrupt A123, and has been locked in a battle with US-based Johnson Controls Inc. to buy A123. Wanxiang was granted permission to offer a loan to A123 by a federal bankruptcy judge.
US Sens. John Thune of South Dakota (R) and Chuck Grassley of Iowa (R) think that if Wanxiang is allowed to buy A123, the Chinese company would have access to the company's military contracts and grid storage technologies. Along with lithium-ion battery systems for electric cars, A123 had two contracts worth more than $4 million to develop batteries for the Air Force, one of which is still in process.
To acquire A123, Wanxiang needs approval from the Chinese government and from CFIUS, a US inter-agency panel that analyzes foreign investment deals for security concerns. A123, which was awarded a $249-million grant from the Obama administration, continues to be something of a political football.
A123 has been granted permission from US Bankruptcy Judge Kevin Carey to borrow $50 million from Wanxiang. After the initial bankruptcy filing, JCI made a bid to buy A123 assets for $125 million, and Wanxiang stepped forward last week saying it wants to be the lead bidder at auction for the assets.
Carey has been hearing testimony from objectors, including Fisker Automotive, which want to extend the bid deadline, auction date, and deadlines in the bidding procedures request, at least 30 days. Fisker has been deeply embedded in A123's technology and wants to see the legal process carried out thoroughly.
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