It's Wanxiang or bankruptcy for A123 Systems as the companies sign agreement
A123 Systems and the Wanxiang Group of China signed definitive agreements today over Wanxiang's strategic investment in A123. The agreements cover a set of loans, senior convertible notes, and stock warrants, that if fully executed would total $465 million and leave Wanxiang with an 80% ownership stake in A123 Systems. Todays agreement follows the memorandum of understanding the companies signed last week.
The Wanxiang Group is the largest autoparts company in China, and already has a significant business in electric vehicle batteries. According to a presentation on the corporate home page, electric buses using Wanxiang batteries have been in operation since 2006 accumulating millions of miles of running experience, and electric vehicles and hybrid vehicles using Wanxiang drive train equipment are in operation in 22 cities in China.
The agreement is made up of three forms of financing, each of which are subject to approval from others.
Initially Wanxiang will provide up to $75 million debt financing in a Senior Secured Bridge Facility. Of that, an initial credit extension of $25 million is expected this week. The remaining $50 million will be funded after satisfying certain conditions. These include a favorable determination from the Committee on Foreign Investment in the U.S. and Chinese government approval.