A123, Satcon Are Latest Clean Tech Casualties

A123 Systems, maker of an advanced lithium iron phosphate battery and energy storage systems on Tuesday filed voluntary petitions for reorganization under Chapter 11, as Satcon, a provider of utility-grade power conversion solutions for the renewable energy sector, filed for bankruptcy on Wednesday.

A123 Systems, a company whose Nanophosphate battery system is in use at some innovative new facilities like AES Gener’s hybrid-fossil Angamos plant in Chile (POWER’s plant of the year), said it would sell all its automotive business assets to Johnson Controls for $125 million. The asset purchase agreement also includes provisions through which Johnson Controls intends to license back to A123 certain technology for its grid, commercial and government businesses.

“To facilitate the transaction process, A123 and all of its U.S. subsidiaries … filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware,” the company said in a statement. “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 under Section 363 of the Bankruptcy Code and enable the Company to maximize the value of its assets for its stakeholders in a controlled, court-supervised environment.”

"We believe the asset purchase agreement with Johnson Controls, coupled with a Chapter 11 filing, is in the best interests of A123 and its stakeholders at this time," said David Vieau, CEO of A123.

A123, the recipient of a $249 million federal grant, had entered—and then scrapped—an agreement to allow Chinese auto-parts maker Wanxiang to invest up to $465 million in A123. The deal had drawn opposition from Rep. Cliff Stearns (R-Fla.), who cited possible national security woes.

"We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion,” said Vieau. “Since disclosing the Wanxiang agreement, we have simultaneously been evaluating contingencies, and we are pleased that Johnson Controls recognizes the inherent value of our automotive technology and automotive business assets.”

A123 is the latest of a string of clean technology companies to run into hard times. Beacon Power, based in Tyngsboro, Mass., last October sought Chapter 11 protection listing assets of $72 million and debt totaling $47 million, including $39.1 million owned on a loan guaranteed by the government. The much-watched flywheel maker had built a 20-MW frequency regulation plant in Stephentown, N.Y., and was in talks for bigger plans. Beacon filed for bankruptcy to allow the company to operate its business "without interruption."

Beacon, which was spun off from now-bankrupt Satcon Technology Corp. in 1997, has contested comparison with cylindrical solar photovoltaic panel-maker Solyndra, which declared bankruptcy in September 2011 and left taxpayers on the hook for $528 million. Solyndra’s failure was preceded by the bankruptcies of Evergreen Solar and SpectraWatt, all recipients of DOE loan guarantees.  

Two other major battery makers folded this year: New York-based Ener1, a company that received a $118 million DOE grant to make electric car batteries filed for bankruptcy protection in January. Valence Technology, a maker of batteries for electric vehicles, sought bankruptcy protection this July, saying it planned to complete restructuring this year.

Boston-based Satcon’s failure, meanwhile, comes after years of financial struggle and in the midst of a protracted downturn for the solar power industry.

"This has been a difficult time for Satcon. After careful consideration of available alternatives, the Company’s Board of Directors determined that the Chapter 11 filings were a necessary and prudent step, allowing the Company to continue to operate while giving us the opportunity to reorganize with a stronger balance sheet and capital structure. Our goal is for Satcon to emerge from bankruptcy reorganization and continue to provide our customers with the quality products that they need," said Satcon President and CEO Steve Rhoades.

Sources: POWERnews, POWER, A123, SatCon

—Sonal Patel, Senior Writer (@POWERmagazine)