Battery maker A123 Systems files for bankruptcy
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A123 Systems, the lithium-ion battery maker backed by a $249 million US government grant, filed for bankruptcy on Tuesday, prompting Republican Mitt Romney's presidential campaign to accuse the Obama administration of gambling away billions of taxpayer dollars.
The Chapter 11 bankruptcy filing came after a $465 million rescue deal with Chinese auto parts supplier Wanxiang Group unraveled.
A123, which has tapped half of its government grant, agreed to sell its automotive operations, including two factories in Michigan, for $125 million to Milwaukee-based Johnson Controls Inc, a leading battery supplier and another recipient of federal green subsidies.
The bankruptcy illustrates the sharp reversal of A123's fortunes since 2009, when its stock rose 50 percent on the first day of trading on the Nasdaq. But weaker-than-expected demand for hybrids and missteps, including a costly battery recall, hit A123's bottom line and left the start-up with excess capacity.
The bankruptcy filing, on the day of the second of three debates between President Barack Obama and Romney, gave Republicans fresh ammunition ahead of the Nov. 6 election to attack Obama's subsidies for green energy.
The U.S. Department of Energy allotted about $90 billion for various clean-energy programs through the administration's stimulus package. Of that, at least $813 million went to energy companies that eventually filed for bankruptcy, including the grant to A123 and a loan to solar panel maker Solyndra.
Romney campaign spokeswoman Andrea Saul cited the A123 bankruptcy as proof of Obama gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work.
Obama campaign spokesman Adam Fletcher countered that the investments helped to more than double renewable energy production from wind and solar, creating good-paying jobs and bringing manufacturing back to our shores.
Romney argues that the government should not pick corporate winners and losers, while Obama has countered that such investments are needed to bolster the U.S. position in advanced batteries and other cutting-edge green technology.
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