Reuters has reported that the Chinese Tier 1 supplier Wanxiang Group Corp. confirmed through its legal representative on 18 October that it will try to outbid Johnson Controls (JCI) for the insolvent battery maker A123 Systems.
Bojan Guzina, an attorney from the Sidley Austin law practice, confirmed his client’s intention at a bankruptcy hearing in Wilmington, Delaware on 18 October, saying: “My client feels it has been left at the altar a couple of times,” adding: “We believe our stalking horse proposal will be materially better than Johnson Controls’.”
Wanxiang lent A123 Systems money in August, in conjunction with the planned acquisition of a majority stake in the ailing company for US$450m. A123’s default on repayments due on the Wanxiang loans prompted its Chapter 11 petition, with the support of debtor-in-possession financing promised from JCI, which intends to buy A123’s automotive battery business for US$125m. The JCI deal remains subject to a court-supervised auction of A123’’ assets, while a bid from Wanxiang would effectively also be conditional on approval from the Committee on Foreign Investment in the United States and the Chinese government, neither of which had been confirmed when A123 Systems warned in a regulatory filing a week ago of its impending insolvency.
The Delaware bankruptcy court judge, Kevin Carey, commented: “It’s nice that the debtor has become the popular girl at the dance with at least two bidders, maybe more.”
