Struggling maker of rechargeable lithium-ion batteries, A123 Systems Inc., filed for bankruptcy protection Tuesday in Delaware.
Johnson Controls will help finance the filing by buying A123’s automotive business assets for $125 million.
Under the agreement, Johnson Controls plans to acquire A123’s automotive business assets, including all of its automotive technology, products and customer contracts; its facilities in Livonia and Romulus, Michigan; its cathode powder manufacturing facilities in China, and A123’s equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive. The agreement also includes provisions through which Johnson Controls intends to license back to A123 certain technology for its grid, commercial and government businesses.
As part of the transaction, A123 will receive $72.5 million from Johnson Controls to continue operating during the process.
A123 Systems has received more than $250 million in state and federal funding to help it run its operations providing batteries for electric cars and other products, but it has faced many problems, including defective products.
In August, A123 had announced a deal to raise funds by selling itself to a Chinese company. A123, which employs nearly 800 in Michigan, announced a deal with a Chinese auto parts company for an investment of up to $450 million. The deal with Wanxiang Group Corp. would have allowed the Chinese firm to acquire an 80 percent stake in A123.
That deal was never finalized.
Founded in 2001, A123 has lost about $600 million since 2008 and its stock price has fallen more than 90 percent over its 52-week high amid questions that it would run out of cash.
A123 has faced a series of problems, including layoffs and the recall of some batteries for safety concerns along with a cash crunch.