(BLOOMBERG) — A123 Systems Inc. (AONE), the electric car battery maker that received a $249 million federal grant, filed for bankruptcy protection after failing to make a debt payment that was due yesterday.
The filing may fuel further political debate over government financing of alternative-energy and transportation businesses. Federal grants and loans to companies including A123, Fisker Automotive Inc. and Tesla Motors Inc. have drawn scrutiny from congressional Republicans following the September 2011 bankruptcy filing of solar-panel maker Solyndra LLC two years after it received a $535 million loan guarantee from the U.S. Energy Department.
Enlarge image Electric Car Battery Maker A123 Systems Files for Bankruptcy
A123 Systems Inc. fell as much as 16 cents, or 70 percent, to 7 cents a share in over-the-counter trading as of 9:43 a.m. Photographer: Jeffrey Sauger/Bloomberg
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“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,” A123 said in a press release. Johnson Controls Inc. plans to acquire A123’s automotive business assets in a deal valued at $125 million and will provide financing of $72.5 million to support A123’s continued operations, according to the release.