Battery Maker A123 Takes Big China Investment, Averts Disaster

8/8/12Follow @gthuang

The Chinese takeover of U.S. cleantech interests continues. Today A123 Systems (NASDAQ: AONE), the Waltham, MA-based battery maker with plants in Michigan, said it has signed an agreement with China-based Wanxiang Group, a big automotive and energy firm, whereby Wanxiang could invest as much as $450 million in A123, starting with up to $75 million in debt financing.

The agreement is a “non-binding memorandum of understanding,” which means the whole thing could still fall through. But the idea is that the strategic investment will help A123 survive its current financial problems and become a bigger player in the electric vehicles and grid storage markets—at least in China. And for Wanxiang, it sounds like a potential buyout with great terms.

In a statement, A123 CEO David Vieau called today’s news “the first step toward solidifying a strategic agreement that we believe would remove the uncertainty regarding A123′s financial situation.”

Indeed, things have been looking grim for the lithium ion battery manufacturer, which said last month that it had four to five months of cash left in the bank. So far this year, A123 has posted net losses of $125 million and $82.9 million in the first and second quarters, respectively, and has seen its stock price fall below $1. The company has gone through a major product recall, layoffs, and a slowdown from key customer Fisker Automotive in the past year, and is trying to pull itself out of a tailspin with new deals, new hires, and new technology.

Battery makers (and other energy firms) looking to China for capital is nothing new, of course. Earlier today, A123 competitor Boston-Power announced it signed an agreement with Beijing Electric Vehicle Company, less than a year after receiving a $125 million investment from Beijing-based GSR Ventures and moving most of its operations to China.

Oh, and why both announcements today? Well, numerology might play a role. Today is August 8, and 8 is a lucky number in Chinese culture. In fact, A123, which has had operations in China for many years, filed for its IPO at 8:08 on the morning of 8/8/08.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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