Creditors want help with A123 sale to Chinese

Creditors of a bankrupt U.S. battery maker that went broke after winning a multimillion-dollar federal grant want permission to hire a lobbying firm to keep the proposed sale of the company to a Chinese competitor on track.

The official committee of unsecured creditors in the bankruptcy of A123 Systems Inc. filed court papers Friday asking a federal judge to sign off on the $75,000 hiring of lobbying group Capitol Counsel LLC.

Citing “considerable political pressure” against the sale of A123 to China-based Wanxiang America Corp., the committee said it needs lobbyists to protect the proposed sale from political opposition.

Although the sale has been approved by a bankruptcy court, it requires the approval of the Treasury Department's Committee on Foreign Investment in the United States, which reviews proposed sales of U.S. companies to foreign buyers.

“Considerable political pressure has been raised against CFIUS approval of the proposed sale to Wanxiang,” attorneys for creditors wrote in their filing asking to hire lobbyists.

The filing also noted that a U.S. competitor, Johnson Controls Inc., which lost out in its bid for A123 Systems, “is doing everything in its power” to encourage the Treasury Department committee to reject the proposed sale, including hiring their own lobbyists.

Milwaukee-based Johnson Controls has said it is open to opportunities to acquire parts of A123 if the Wanxiang deal doesn’t move forward.

A123 Systems announced Dec. 11 that the U.S. Bankruptcy Court had approved an asset purchase agreement with Wanxiang America through which the Chinese company would acquire nearly all of A123’s assets for $256.6 million. The court also approved an asset purchase agreement with Navitas Systems LLC through which Navitas would acquire A123's government business, including all U.S. military contracts, for $2.25 million.

The A123 creditors committee apparently settled on Washington-based Capitol Counsel because of the firm’s ties to the Blackstone Advisory Partners, the financial adviser to the creditors committee. Still, the filing included an affidavit by John O’Neill, a principal at Capitol Counsel and former Republican staffer for the Senate Finance Committee and aide to Sen. Chuck Grassley, Iowa Republican.

Mr. Grassley has been among the most vocal on Capitol Hill in raising questions about the proposed sale of A123 to a Chinese company. He and Sen. John Thune, South Dakota Republican, issued a joint statement last month calling for a “full review” of the bankruptcy transaction by the federal government.

“In the end, the taxpayers will be left having to repay interest to China for a business that a Chinese company now owns,” the lawmakers said.

Under the proposed hiring, Capitol Counsel lobbyists would receive a flat fee of $75,000 for work expected to last until the end of February.

According to the hiring agreement, signed Dec. 28, the lobbying services will include “political and policy intelligence and analysis,” and “strategic guidance and tactical implementation regarding legislative and political matters,” along with “direct advocacy before Congress, including relevant congressional committees and the executive branch as appropriate.”

Although A123 received approval for a $249 million federal grant through the American Recovery and Reinvestment Act of 2009, it received only about half of the money before filing for bankruptcy protection last year. The funds were intended to create thousands of American jobs, but a review by The Washington Times of government job-tracking data shows that only about 400 positions were created before the company joined a growing list of federally backed energy businesses that ended in bankruptcy.

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