WALTHAM, Mass. —Electric-car battery manufacturer A123 Systems
, the recipient of nearly $250 million in government grants, filed for Chapter 11 bankruptcy protection Tuesday morning with a plan to sell its auto-business assets to auto-parts maker Johnson Controls.
A123 and two affiliates sought creditor protection in U.S. Bankruptcy Court in Wilmington, Del., a day after it said it would be unable to make a $2.8 million interest payment to bondholders due Monday. Those bondholders, owed $143.8 million plus interest, are listed as the battery maker’s largest unsecured creditor.
The deal is valued at $125 million, and the sale is subject to higher offers at a bankruptcy auction. Johnson Controls is providing the company with $72.5 million in what is known as debtor-in-possession financing to fund the bankruptcy case.
A123’s auto business fits with Johnson Controls’ “long-term growth strategies and overall commitment to the development of the advanced battery industry,” Johnson Controls Power Solutions president Alex Molinaroli said in a statement.
Investment bank Lazard Freres has been shopping the company for months, but, according to court filings, only the U.S. unit of Chinese auto-parts maker Wanxiang Group made an offer that would keep the company in business.
