News Column

Lobbyists Work Both Sides on A123 Sale

Jan 16, 2013

Jim McElhatton

Lobbyists are swarming on both sides of the pending sale of a U.S. battery-maker backed by more than $100 million in federal grants that soon could be in the hands of a Chinese competitor.

Just last week, a federal judge allowed creditors of bankrupt, government-backed A123 Systems Inc. to hire a D.C.-based lobbying firm to try to convince federal officials to sign off on its proposed sale to China-based Wanxiang.

Meanwhile, a failed bidder for A123, U.S.-based Johnson Controls Inc., acknowledged in court papers filed Monday that it has been lobbying on the sale, too, and says its right to do so is protected by the First Amendment.

While A123's fate keeps lobbyists both for and against the sale busy, vendors and stockholders have been lining up in hopes of recouping just some of they money they say they have lost through the company's bankruptcy.

Two law firms recently filed claims seeking more than $800,000 combined, while former sales executives are trying to get the bankruptcy court to honor bonus stipulations in their employment contracts. Vendors also lined up to get paid.

One retiree who said he lost money investing in A123 recently wrote a letter to the U.S. Bankruptcy Court in Delaware asking not only for his money back but warning against the sale to Wanxiang.

In a handwritten note sent to the judge in the case, Edward Lopez and his wife, Leticia, said they bought A123 stock because it had drawn "brainpower" from the Massachusetts Institute of Technology and the company was "hyped" by the U.S. Department of Energy.

"We were totally victims of expecting too much from a supposedly competent management," the couple wrote.

In a phone interview, Mr. Lopez, a retired engineer who lives in Texas, said he thought the company had good talent, but he's still seeking answers about how it ended up bankrupt.

"I don't know what happened," he said. "I'm sure a lot of people are wondering."

While A123 received approval for a $249 million federal grant through the American Reinvestment and Recovery Act, it received only about half of the money before filing for bankruptcy protection earlier last year. The funds were intended to create thousands of American jobs, but a review by The Washington Times of government job tracking data showed only about 400 new jobs were created.

The fate of A123 now rests with the Treasury Department's Committee on Foreign Investment in the United States, a panel that reviews proposed sales of U.S. companies to foreign buyers. A bankruptcy judge has already approved the sale of most of A123's assets to Wanxiang America Corp.

Citing considerable pressure against the sale mounting in Washington, a creditors committee formed in A123's bankruptcy case won permission last week to pay $75,000 to lobbying firm Capitol Counsel. The creditors said they needed the lobbyists to help push for the sale because Johnson Controls was "doing everything in its power" to get the Treasury Department committee to reject the sale.

In a separate legal filing this week, Johnson Controls didn't dispute lobbying on the sale but said that whatever communications the company had with the federal government was protected under the First Amendment.

Johnson Controls has said it is open to opportunities to acquire parts of A123 if the Wanxiang deal doesn't move forward. Last month, the company appealed the decision by a bankruptcy judge to allow Wanxiang to buy most of A123's assets.

According to Senate lobbying disclosure, Johnson Controls recently hired two Washington lobbying firms -- Wiley Rein LLP and J.A. Green & Co. -- though registration papers do not say whether either firm was hired to lobby on the A123 sale.



Source: (c)2013 The Washington Times (Washington, DC). Distributed by MCT Information Services.


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