A123 Systems names Wanxiang America successful bidder at $256 million

By Jim Witters

Wilmington, Del., Dec. 10 - A123 Systems, Inc. named Wanxiang America Corporation and Navitas Systems, LLC the successful bidders for substantially all of the company's assets during an auction that concluded Dec. 9, according to documents filed with the U.S Bankruptcy Court for the District of Delaware.

Wanxiang agreed to pay $256.6 million in cash and assume certain A123 liabilities.

The auction continued from Dec. 6 through Dec. 9.

Excluded from the sale are:

• All intellectual property rights exclusively developed under the U.S. Department of Defense security contracts and other U.S. government contracts;

• The lease, inventory and equipment at the Ann Arbor, Mich., research and development facility; and

• Other facilities and assets that may be identified through the parties' additional engagement with the committee on foreign investment in the United States as being integral to the operations and business of the government research team and government solutions team or the performance of the DOD security contracts and other U.S. government contracts.

A sale hearing is scheduled for 2 p.m. ET on Dec. 11.

As previously reported, Johnson Controls was the stalking horse bidder for the automotive business assets, with a proposed purchase price of $116 million.

Wanxiang said in November that it would like to be the stalking horse bidder and was prepared to make an offer for all of A123's assets, not just the automotive sector.

Wanxiang America is a manufacturer of automotive components based in the United States. Wanxiang America is a wholly owned subsidiary of Wanxiang Group Corp., a Chinese company with more than $13 billion in annual revenue and more than 45,000 employees worldwide.

Patent agreement

Meanwhile, A123 also is seeking court approval of an agreement with patent licensor LiFePO4+C Licensing AG and patent owners Hydro-Quebec, Universite de Montreal and Centre National de la Recherche Scientifique resolving a sale objection and obtaining the consent of those parties to the assumption and assignment of a patent sublicense.

A dispute arose after A123 filed its sale motion over the rights of A123 to assign the rights of a Johnson Controls patent sublicense and the scope of rights an assignee would be entitled to.

The licensor and patent owners objected to the bid procedures and sale motion in November.

"Prior to and during the auction, the debtors and the objectors negotiated to resolve the objection and were able to reach an agreement whereby the objectors will not pursue the objection and will allow the assumption and assignment of the patent sublicense, subject to the terms and conditions set forth in the consent agreement," court documents state.

The terms of the proposed consent agreement include:

• The sale agreement will not include a provision obligating the purchaser to grant additional sublicenses;

• Any assignment of the patent sublicense will be without amendment;

• If the debtors' assets are sold to a single purchaser, the buyer must acquire the auto business or commercial business or both and buy the Chinese cathode power production facility; and

• If the debtors' assets are sold to multiple purchasers, each buyer must qualify as an assignee.

"The resolution reflected in the consent agreement is vital to the debtors' ability to consummate the sale of substantially all of their assets, which is related to maximizing the value of the debtors' estate for their creditors," the motion states.

The patent licensing agreement is scheduled for consideration at the Dec. 11 sale hearing.

Based in Waltham, Mass., A123 designs, develops, manufactures and sells rechargeable lithium-ion batteries and battery systems. The company filed for bankruptcy on Oct. 16 under Chapter 11 case number 12-12859.

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