By on December 11, 2012

Battery maker A123 was sold to China’s Wanxiang Group, but the company won’t come with more government money. The DOE won’t give A123 Systems Inc. the balance of a $249 million grant, a department official tells Reuters. Wanxiang, in the meantime, let it become known that it did not ask for the grant money, and that it did not anticipate receiving it.

The deal needs court and U.S. government approval. Court approval is more or less certain after Wanxiang outbid Johnson Controls. Approval by the Committee on Foreign Investment in the United States (CFIUS) is another matter. The U.S. government is under a lot of criticism for throwing good money after bad companies.

If the deal won’t get government approval, A123 would be put back on the auction block, whereupon Johnson Controls would be very interested in bidding again, Alex Molinari, president of Johnson Controls Power Solutions, told Reuters.

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11 Comments on “Surprise: U.S. Government Won’t Give Money To Chinese-Owned A123...”

  • avatar

    So do we taxpayers get made whole on the part of the grant that was already paid, as part of this sale, or is that money just gone now?

    • 0 avatar

      I could be wrong, but I don’t think grants work the same way as loans.

      • 0 avatar
        johnny ro

        Dan is right.

        Grants are one-way transfers, in general. The return side is the transferee does the thing that the grantor wants, which benefits society if all goes well.

        Repayment is not contemplated. Barring outright theft or fraud.

    • 0 avatar

      I would guess that the DOE would be treated as an unsecured creditor, so junior to the bankruptcy fees, Wanxiang’s DIP loan, Wanxiang’s pre-bankruptcy loan, any other secured loans, pre-petition amounts to the IRS and pre-petition wages.

      So unlikely to see much, and certainly less than 25% recovery looking at their claims

  • avatar

    The money already given is gone. Along with all tech and, if any, patents.

  • avatar

    Slightly confused here, does the denial of the unexpected grant affect whether or not the sale of A123 to Wanxiang will be approved?

  • avatar

    In other news, E46M3_333 won’t be banging Britney Spears this week. Ms. Spears did not ask to be banged, and a spokesperson for E46M3_333 said he did not anticipate banging Ms. Spears.

  • avatar

    I’m guessing this won’t get through the committee. Right now selling things to the Chinese isn’t politically smart.

    Especially companies that have been on the receiving end of government money.

    There is also DOD technology involved here but since we’re talking batteries and not encryption codes and other stuff, I’m guessing it’s not quite such critical technology.

    • 0 avatar

      Yeah, this deal reminds of the US Air Force Aerial Tanker deal that was initially won “fair and square” by Airbus of Europe.

      But there was such an outrage about a European firm supplying our Aerial tankers that the DoD reneged on the award to Airbus and changed the bidding rules after the fact so that Boeing could resubmit their bid and win that contract at a much lower price.

      This deal also reeks of the oil refinery sale that was initially won by China but halted by the courts in California so that they could change the rules after the fact so some American outfit could buy the refinery at a much lower price than what China had bid.

      I don’t know why they invite these international bids when it is clear that they aren’t going to honor them. It is supposed to be in our national interest, I understand that, so why invite foreigners to bid if we’re going to cheat anyway them if they submit the highest bid?

      A123 never made sense to me as something that should be sponsored by we, the people, because the Chinese can do it much cheaper and better than we can. Just look at the high-speed rail project in California or any and all of the solar and wind-energy projects going on in this country.

      If we’re not going to let the foreigners win, we should not invite them in to bid.

      • 0 avatar

        Agreed on all points.

        The Airbus tanker thing was a sham. Boeing ‘won’ the tanker contract in the end as a consolation prize because Lockheed got the F-35 contract.

        Boeing may get the last laugh, though, because they also build drones, whose popularity in the last few years has dramatically increased, while the F-35 program struggles to maintain support due to its high cost.

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