Rechargeable-car-battery manufacturer A123 Systems received final approval from U.S. Bankruptcy Court today, permitting it to draw on $50 million in debtor-in-possession (DIP) financing extended by China's Wanxiang Group.
A123 intends to use the financing to keep its business running while the company's bankruptcy case works its way through the courts. CEO Dave Vieau explained in a statement, "This financing provides us with the operational and financial flexibility we need to support our business and serve our customers while we conduct an efficient sale of our assets."
It remains to be seen who ultimately ends up in control of A123. Initially, Wanxiang appeared to be in the lead, based on an agreement A123 signed to accept a $75 million loan from the company as part of a total $465 million planned investment. Subsequently, rival battery producer Johnson Controls (NYSE:JCI) offered to buy all of A123's automotive assets for $125 million, and offered $72.5 million DIP financing as well.
Now, it appears Wanxiang has moved back into the lead. Ultimately, both companies will have an opportunity to bid for A123's assets at an auction the court will hold in December.