Court OKs sale of U.S. government-backed A123 to Chinese firm
By Tom Hals
WILMINGTON, Delaware (Reuters) - China's largest auto parts maker got court approval on Tuesday for its controversial purchase of A123 Systems Inc, a bankrupt maker of electric car batteries, but the judge said he was troubled that a U.S. rival might be working to kill the deal.
A123, which was partly funded with U.S. government money, was sold at an auction on Saturday for $256.6 million to Wanxiang Group of China, which outbid Johnson Controls Inc of Milwaukee.
The auction result prompted outcry from U.S. politicians who objected to A123's taxpayer-financed lithium-ion technology ending up in the hands of an economic rival. Johnson Controls has said it remains interested in A123 if Wanxiang fails to get approval from the U.S. government, which is coming under pressure to block the deal.
"I'm troubled by suggestions that someone who participated in the auction may in fact already be working against it," said Delaware Bankruptcy Judge Kevin Carey at the end of Tuesday's hearing.
Carey ordered into escrow a $5.5 million fee from the sale that was earmarked for Johnson Control's in return for it being the lead bidder to support the A123 auction. The money will be released when the sale closes or after an investigation by A123 creditors.
William Baldiga of Brown Rudnick, who represents the official committee of unsecured creditors, had told Carey he had a confidential letter that suggested Johnson Controls planned to undermine Wanxiang if the Chinese company won the auction.
Johnson Controls attorney, Joshua Feltman of Wachtell, Lipton, Rosen & Katz, said the company should not be punished "because we sympathize with Michigan Congressional delegation."
A123 has several facilities in Michigan and its politicians have been vocal in opposing the sale to Wanxiang. Continued...