A123 Systems has been approved the $50 million loan from China’s Wanxiang Group, after it has already received a $249.1 million federal grant.
U.S. Bankruptcy Judge Kevin Carey approved the loan today, October 6th, in Wilmington, Delaware. Although Johnson Controls was willing to be A123’s lender, it withdrew to avoid a fight over the financing. Last month A123 Systems filled for bankruptcy protection, planning to sell its assets to Johnson Controls for about $125 million. Last week, Wanxiang, who was also the first bidder, said it wants to be the lead bidder at an auction for A123’s assets.
Since delaying the auction for a month, as some objectors requested, would have meant making the company lose more money, the court approved that Wanxiang would be the lender. On August 31st, A123 listed in its Chapter 11 bankruptcy petition debt of $376 million and assets of $459.8 million. U.S. senators John Thune, a South Dakota Republican, and Iowa Republican Chuck Grassley sent a letter to US Treasury Secretary Timothy Geithner expressing their concerns over the deal with the Chinese Winxiang.
“A123 has received millions of taxpayer dollars to develop technology and intellectual property that should not simply be shipped to China,” Thune said in the statement.