(By Balaseshan) A123 Systems Inc. (NASDAQ:AONE) shares hit an all-time low of $0.06 during Tuesday's regular trade after the lithium-ion battery maker filed for bankruptcy protection to facilitate the deal to sell its automotive business assets to Johnson Controls Inc. (NYSE:JCI)
Under the terms of the $125 million agreement, Johnson Controls plans to buy A123's automotive business assets, including all of its automotive technology, products and customer contracts.
The assets also include A123's facilities in Livonia and Romulus, Michigan, its cathode powder manufacturing facilities in China, and A123's equity interest in Shanghai Advanced Traction Battery Systems Co., A123's joint venture with Shanghai Automotive.
The asset purchase agreement also includes provisions through which Johnson Controls intends to license back to A123 certain technology for its grid, commercial and government businesses.
A123 also continues to engage in active discussions regarding strategic alternatives for its grid, commercial, government and other operations, and has received several indications of interest for these businesses.
To facilitate the transaction process, A123 and all of its U.S. subsidiaries today filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Its subsidiaries located outside the U.S. were not included in the filings.
This action is expected to allow the company to provide for an orderly sale of the automotive business assets and all other assets and business units under Section 363 of the Bankruptcy Code and enable the company to maximize the value of its assets for its stakeholders in a controlled, court-supervised environment.
In conjunction with the proposed transaction, A123 has received a commitment from Johnson Controls for $72.5 million in "debtor in possession" financing to support the company's continued operations during the pendency of the sale process.
A123 has filed a number of customary motions seeking court authorization to continue to support its business operations during the transaction process, including the continued payment of employee wages, salaries and health benefits without interruption.
Latham & Watkins LLP and Richards, Layton & Finger are serving as legal advisors, Lazard is serving as financial advisor, and Alvarez & Marsal is serving as restructuring advisor to A123.
AONE is trading 73.75 percent lower at $0.0631 on Tuesday, while JCI trades up 0.88 percent at $26.23.