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A123 Company is a famous new energy battery benchmarking company in the United States, but public information shows that since the company was listed in 2009, the company has not completed its target for one quarter. At present, its business is getting worse and worse, eager to sell. Wanxiang Group from China became the last hope of A123. However, this transaction may be fatal due to opposition within the United States; even if it is successfully concluded, it is still unknown whether it can ultimately save A123. Because the global electric car market needs to be started, it still needs to wait for five to eight years.
Chinese private enterprises once again played the role of a "savior." Recently, the battery giant A123 Company on the verge of bankruptcy in the United States stated that China Wanxiang Group will invest US$450 million to acquire 80% of A123’s shares. However, the transaction still needs the approval of the competent authorities of both China and the United States. Because the United States is concerned about the leakage of core technology, it is opposed to this transaction.
A123 (Nasdaq: AONE) is a U.S. company specializing in the development and production of lithium-ion batteries and energy storage systems. The company offers lithium-ion batteries with high power and high energy density, long life, and excellent safety. Performance is ahead of the lithium-ion battery market. Its technology-oriented product areas are the next generation of transportation, power grids and consumer applications. At present, A123's funds are only enough for its support for several months.
Wanxiang Group and A123 have signed an unconstrained memorandum of understanding. According to the information released by A123, according to the terms of the strategic agreement, the total investment of Wanxiang Group is approximately US$450 million, which is calculated based on the A122 ordinary issueable shares used to exercise and convert bills. Universal will have approximately 80% of A123 issued. share. The specific terms of the two parties are more complicated: Wanxiang Group will provide A123 with an initial debt financing of US$75 million; under certain conditions, Wanxiang Group will purchase A123’s total of US$200 million in priority for guaranteeing convertible stocks. In addition, Wanxiang Group will hold 175 million US dollars of option warrants. If Wanxiang cashes the notes financing and the warrants of the convertible notes, the issuance of the 50 million U.S. dollar loan in bill financing must comply with and meet the necessary conditions, including the approval of the U.S. Offshore Investment Committee and the Chinese government. The issuance of convertible notes and related warrants must also comply with and satisfy additional conditions, including the approval of shareholders of A123 and the approval of the Rodriguez Act, and the exchange of existing 6% convertible notes and related warrants. Or redeem, at least 90% of the current 3.75% convertible subordinate notes due in 2016 are acquired or redeemed.
A123, a company with almost no rice, was eager to introduce Wanxiang Group. A123 said that the transaction is expected to be completed by the end of the year, when the injection of Wanxiang Group will help A123 to overcome the difficulties of the next few months. According to public information, since the listing of A123 in 2009, there has been no quarter to complete the set target, and its business has been deteriorating. As of the end of the second quarter, A123’s cash situation was worrying, and its cash flow dropped by more than 50% from US$113.1 million at the end of the first quarter to approximately US$47.7 million. Wanxiang Group is a well-known large-scale private group in China. The (annual) operating income of Wanxiang Group and its affiliates exceeds US$13 billion.
"According to A123's burning speed, this money will not last long." Informed sources said, "A123 company's annual personnel operating costs up to 100 million US dollars." In addition, A123's income and expenditure has been a serious imbalance. According to public information, in the second quarter of this year, its sales revenue was less than US$17 million, and total losses in the second quarter reached US$82.9 million. The loss per share was as high as US$0.56.
Although A123 company was eager to reach a deal, the voice of opposition in the United States has risen. Michael Weiser, a member of the US-China Economic Security Review Committee of the United States Congress, pointed out that (lithium batteries) is a "key" area and he hopes that the U.S. government will conduct a rigorous review of transactions. In addition, opponents said that in 2009, the U.S. government had allocated $249 million to A123. If A123 is acquired by a Chinese company, it will lead to the outflow of wealth from the United States and involve the leakage of the core technology of "lithium batteries."
Whether the current transaction will be successful or not will be subject to the approval of the competent authorities of the United States and China. However, those familiar with the Chinese auto industry and the new energy auto market pointed out that even if Wanxiang Group successfully acquires A123, it still needs to calmly look at the new energy auto market. It may be that in three or even eight years, the new energy automobile market in China is still unable to start.