A123 Systems Inc., a struggling battery maker in Michigan with strength of 800 employees has won a deal with a Chinese auto parts company and will receive around $450 million investment in business.
With this investment, the Chinese firm is likely to acquire a majority of stake (80 percent of stake in A123). The deal is finalized with Wanxiang Group Corp. where A123 has successfully won around $500 million in grants along with other supports from the federal and state governments. This also includes a grant of $249 million from Energy Department and $238 million from the state of Michigan as in August 2009. This investment is made as part of $800 billion stimulus.
The winning company has also received a 2-year extension for spending the rest of $249 million grant over its deadline. This money was assigned to spend on construction of new lithium-ion battery manufacturing facilities in the state of Michigan. A123 was opened its first Livonia plant in the year 2010 and its other plant Romulus was opened last year. Out of $249.1 million, the company still saves $120 million of grant that has to be spent on the business.
A123 was founded in 2001 and since then the company faced a loss of around $600 million since 2008 with a straight 91 percent fall of stock price over its 52 weeks.