WALTHAM, MA – A123 Systems declared Chapter 11 this week and has entered into an agreement with Johnson Controls for the company to purchase A123’s assets. This $125 million agreement covers the purchase of A123’s automotive business assets, which includes its automotive technology, products, and customer contracts. Johnson Controls also agreed to pay $72.5 million to support A123’s operations during the pending sales process.

This agreement also covers the purchase of A123’s facilities in Livonia and Romulus, Mich., its cathode manufacturing facilities in China, and its equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive.

Beyond A123’s automotive business, the agreement with Johnson Controls includes provisions through which Johnson Controls intends to license back to A123 certain technology for its grid, commercial, and government businesses.

The company’s subsidiaries outside the U.S. were not included in its bankruptcy filings.

“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. “We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion. 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. We are also pleased that we have received indications of interest that recognize the value of our grid and commercial businesses. We are encouraged by the significant interest we have received, as multiple parties have submitted proposals for these businesses. As we move through this transaction process, we expect to continue operating and working with customers and suppliers.”

“Our interest in A123 Systems is consistent with our long-term growth strategies and overall commitment to the development of the advanced battery industry,” said Alex Molinaroli, president, Johnson Controls Power Solutions. “Requirements for more energy-efficient vehicles continue to increase, which is driving automotive manufacturers to pursue new technologies across a broad spectrum of powertrains and associated energy storage solutions. We believe that A123’s automotive capabilities are a good complement to our existing portfolio and will further advance Johnson Controls' position as a market leader in this industry.”