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Johnson Controls files appeal of A123 sale, seeking payment of break-up fee and expenses; says still “open” to buying parts if Wanxiang sale not completed
17 December 2012
As part of the sale order, the court had ordered the escrow of the break-up fee and expense reimbursement due to Johnson Controls under its stalking-horse agreement with A123. Johnson Controls is appealing the sale order to obtain the breakup fee and expense reimbursement to which it says it is entitled under that agreement and which were previously approved by the bankruptcy court.
Following the agreement on the sale, Johnson Controls had announced that it had officially withdrawn from the bankruptcy auction when it declined to match the higher bid submitted by Wanxiang. (Earlier post.) Johnson Controls and NEC had submitted complementary bids, Johnson Controls for the automotive and government assets and NEC for the grid and commercial assets. Johnson Controls originally made a $125-million stalking-horse bid for A123’s automotive business.
In that announcement, Alex Molinaroli, president, Johnson Controls Power Solutions, said that while A123’s automotive and government assets were complementary to his company’s portfolio and aligned with long-term goals, Wanxiang’s offer was beyond the value of those assets to Johnson Controls.
A123 was directed to place the breakup fee and expense reimbursement in escrow after A123’s creditors’ committee suggested to the court that Johnson Controls was lobbying against the sale of A123 to Wanxiang.
We appreciated the opportunity to serve as stalking horse, which resulted in significant value to the estate, creditors and employees. As a market leader and major employer with significant operations in the United States, we have expertise and insights regarding the industries we serve, which are important resources for leaders and decision makers. Our representatives regularly provide educational material and expert opinions on many topics including advanced batteries, lithium-ion technology and the various applications they serve.—Alex Molinaroli
Johnson Controls said that it maintains an active government relations function that involves regular interaction with policy makers and agencies on the full range of issues relevant to the company. The activities of Johnson Controls’ representatives involving public officials are consistent with First Amendment rights to free speech and are strictly governed by the company’s ethics policy and comply with government regulations, the company asserted.
US regulatory approval required for any sale of A123 to Wanxiang has been an issue dating back to Wanxiang’s original failed attempt to acquire A123 earlier in 2012 prior to bankruptcy. Johnson Controls said that it has consistently maintained that national security questions tied to the core technology used in all of A123’s businesses represent a risk to the sale which cannot be dismissed until resolved by the government review process.
Should the sale of A123 Systems to Wanxiang not be completed for any reason, Johnson Controls remains open to considering future opportunities to acquire relevant portions of A123’s assets, keeping this critically important technology in the United States, preserving jobs and furthering the purpose of the American Reinvestment and Recovery Act.—Alex Molinaroli
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