A123 Systems Announces Non-Binding Memorandum of Understanding With Wanxiang Group Corporation for Strategic Investment
08 Août 2012 - 1:00PM
A123 Systems (Nasdaq:AONE), a developer and manufacturer of
advanced Nanophosphate® lithium iron phosphate batteries and
systems, today announced that it has signed a non-binding
memorandum of understanding (MOU) with Wanxiang Group Corporation
establishing the framework for a strategic investment through which
Wanxiang would invest up to $450 million in A123. Wanxiang is
China's largest automotive components manufacturer and one of
China's largest non-government-owned companies. Wanxiang's proposed
investment in A123 is intended to create the capital structure
necessary for the company to continue growing its core businesses,
and alignment with Wanxiang is also expected to substantially
strengthen A123's access to the growing vehicle electrification and
grid-scale energy storage markets in China. A123 will hold a
conference call today at 8:00 a.m. ET to discuss this announcement
as well as the company's financial results for the second quarter
2012.
"Today's announcement is the first step toward solidifying a
strategic agreement that we believe would remove the uncertainty
regarding A123's financial situation," said David Vieau, CEO of
A123. "A substantial capital investment from Wanxiang would not
only provide financial stability to A123 as we continue to grow,
but it would also align us with a large, successful global brand in
the automotive and cleantech industries. Wanxiang has a successful
track record of operating in the U.S. with significant employment
and commitment to good corporate citizenship, and we expect that a
strategic agreement with Wanxiang would help enhance our
competitive position in the global marketplace, especially in
China."
Wanxiang Group Corporation and its related companies have more
than $13 billion in revenue and more than 45,000 employees across
its global businesses in equipment and automotive parts
manufacturing, clean energy, financial services, agricultural
products, natural resources and real estate, among others. Through
its subsidiaries, including Wanxiang America Corporation, it has
more than 3,000 U.S.-based employees.
"A123 offers industry-leading technology for vehicle
electrification and grid-scale energy storage, as well as strong
manufacturing and systems engineering capabilities in Michigan and
Massachusetts. We think this creates important synergies with
Wanxiang, which has been involved in this field for 12 years and
has strong R&D and manufacturing capabilities in China,
especially as we continue to expand on our strategy of investing in
the automotive and cleantech industries in the U.S.," said Weiding
Lu, CEO of Wanxiang Group. "This MOU is the first step toward a
longer-term agreement through which we plan to build on the
foundation A123 has established in the U.S. and help expand the
company's capabilities both domestically and internationally, which
we believe would create long-term value to the customers, investors
and other stakeholders of both companies."
Under the proposed terms of the strategic agreement outlined in
the MOU, Wanxiang would provide A123 with up to $75 million in
initial debt financing under a Senior Secured Bridge Facility, with
an initial credit extension of $25 million and $50 million to be
funded after the satisfaction of certain closing conditions, and,
subsequently, upon satisfaction of certain closing conditions,
purchase $200 million aggregate principal amount of A123's Senior
Secured Convertible Notes. The agreement would also include the
potential for Wanxiang to invest up to an additional $175 million
if it exercises the warrants that would be issued in connection
with the Bridge Facility and the Convertible Notes for cash.
Incurrence of the remaining $50 million of loans under the Senior
Secured Bridge Facility would be subject to the satisfaction of
certain approvals and conditions, including receipt of favorable
determination from CFIUS and receipt of Chinese government
approvals. Issuance of the Convertible Notes and the related
warrants would also be subject to additional conditions, including
approval from A123's shareholders, termination of the
Hart-Scott-Rodino waiting period, the conversion or redemption of
all the outstanding six percent Convertible Notes and relevant
warrants and the repurchase or retirement of at least 90 percent of
A123's outstanding 3.75 percent convertible subordinated notes due
2016.
According to the proposed terms of the strategic agreement, if
the entire amount of the initial debt financing is provided to A123
and the full amount of the warrants and Convertible Notes are
issued and exercised for cash, Wanxiang's total capital investment
in A123 from these agreements would total approximately $450
million. The total amount of shares of A123's common stock issuable
upon exercise and conversion of the warrants and Convertible Notes
would represent approximately 80 percent of the then outstanding
common stock of A123. While the MOU is non-binding and the
execution of definitive documentation is subject to negotiation
and, among other items, the amendment of agreements with certain of
A123's existing lenders, A123 and Wanxiang are currently
negotiating definitive documentation and intend to close the full
transaction by the end of 2012. A123 cannot provide any assurance,
however, that definitive documentation will be executed, or, if it
is executed, that the conditions to funding the full investment
will be fulfilled.
This press release shall not constitute an offer to sell nor a
solicitation of an offer to buy any of these securities, nor shall
there be any offer, solicitation or sale of these securities in any
state in which such offer, solicitation or sale would be unlawful
prior to the registration or qualification under the securities
laws of any such state.
Conference Call Information
What: |
A123 Systems second quarter 2012 financial
results and proposed strategic investment agreement with Wanxiang
Group Corporation |
When: |
Wednesday, August 8, 2012 |
Time: |
8:00 a.m. ET |
Webcast: |
http://ir.a123systems.com/ (live and
replay) |
Live Call: |
(877) 266-0479, domestic |
|
(678) 894-3048, international |
Replay: |
(855) 859-2056, domestic |
|
(404) 537-3406, international |
|
|
Live and replay conference ID
code: 18144497 |
|
About A123 Systems
A123 Systems, Inc. (Nasdaq:AONE) is a leading developer and
manufacturer of advanced lithium-ion batteries and energy storage
systems for transportation, electric grid and commercial
applications. The company's proprietary Nanophosphate® lithium iron
phosphate technology is built on novel nanoscale materials
initially developed at the Massachusetts Institute of Technology
and is designed to deliver high power and energy density, increased
safety and extended life. A123 leverages breakthrough technology,
high-quality manufacturing and expert systems integration
capabilities to deliver innovative solutions that enable customers
to bring next-generation products to market. For additional
information please visit www.a123systems.com.
The A123 Systems, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6600
Safe Harbor Disclosure
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended that are subject to risks, uncertainties and other
important factors, including statements with respect to the
expected benefits of Wanxiang's strategic investment in A123, the
expansion of A123's domestic capabilities and its potential to
create long-term value for A123's and Wanxiang's customers,
investors and other stakeholders, the negotiation and execution of
definitive documentation relating to the financings, the
satisfaction of conditions to closing of each of the financings and
the closing of these financings. Among the factors that could cause
actual results to differ materially from those indicated by such
forward-looking statements are: failure to obtain required
stockholder and U.S. and Chinese government approvals, delays in
the development of A123's products, delays in the scale-up,
revalidation and increased efficiency of A123's manufacturing
capacity, delays in A123's production ramp, adverse economic
conditions in general and adverse economic conditions specifically
affecting the markets in which A123 and Wanxiang operate, and other
risks detailed in A123 Systems' quarterly report on Form 10-Q for
the quarter ended March 31, 2012 and other publicly available
filings with the Securities and Exchange Commission. All
forward-looking statements reflect A123's expectations only as of
the date of this release and should not be relied upon as
reflecting A123's views, expectations or beliefs at any date
subsequent to the date of this release.
CONTACT: A123 Systems PR Contact:
A123 Systems
Dan Borgasano
617-972-3471
dborgasano@a123systems.com
A123 Systems IR Contact:
ICR, LLC
Garo Toomajanian
617-972-3450
ir@a123systems.com
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