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A123 wins bankruptcy court approval of asset sale

Published on NewsOK Modified: December 11, 2012 at 5:11 pm •  Published: December 11, 2012

WILMINGTON, Del. (AP) — A Delaware bankruptcy judge on Tuesday approved the sale of most of the assets of failed battery maker A123 Systems Inc. to the U.S. arm of Chinese auto parts conglomerate Wanxiang Group Corp. for nearly $257 million.

In asking Judge Kevin Carey to approve the sale, attorneys for A123 noted that the winning bid submitted by Wanxiang America Corp. last week was more than double an initial $125 million offer for the company's automotive battery unit by Milwaukee-based auto parts marker Johnson Controls Inc.

Even though A123's defense-related business assets will be sold separately for $2.25 million to Navitas Systems, of Woodridge, Ill., Wanxiang's purchase still requires approval by the Committee for Foreign Investment in the United States, a federal interagency committee that reviews sales of U.S. companies to foreign owners.

An attorney for A123 told Carey that the initial 30-day review period for CFIUS expires Wednesday, and that the panel plans to continue its investigation during a 45-day extension, meaning a decision may not come until mid-January.

Because of its role as the lead bidder, Johnson Controls is entitled to a breakup fee and expense reimbursement totaling $5.5 million. But Carey ruled that the breakup fee will be put in escrow pending an investigation by A123's official creditors committee, which suggested that Johnson Controls, after losing out on the bidding, is now lobbying for CFIUS to deny approval of the Wanxiang deal.

Carey said he was troubled by the suggestion that after participating in the auction, JCI may be now working against the sale to Wanxiang.

"Something has been raised here today that gives me pause," Carey said, adding that putting the breakup fee in escrow was the prudent thing to do.

Josh Feltman, an attorney for JCI, told Carey he had no personal knowledge of Johnson Controls working to scuttle Wanxiang's purchase of A123. But he said was aware that some members of Congress opposed the sale to Wanxiang and would have preferred that JCI won the auction.

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