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U.S. Senators express misgivings about Chinese firm plan to buy A123

Both Republican and Democrat senators have expressed concern over the planned acquisition by a Chinese firm of the now bankrupt government funded battery maker A123.

the bipartisan group of senators claimed last week that the planned buyout may compromise national security.

The China-based Wanxiang Group Corp, together with Johnson Controls Inc,  is actively seeking to acquire the struggling company, which makes lithium ion batteries for electric cars.

A123’s technology is important to the United States as the company supplies products to the military and the country’s electrical grid and that the government  must ensure that the sale of A123 must not compromise national security, a letter written by senators to Treasury Secretary Timothy Geithner, Energy Secretary Steven Chu, and some other top cabinet officials, said.

The letter was signed by the influential Republican Rob Portman from Ohio and Democrat Dick Durbin from Illinois, as well as seven others.

The group called on the Committee on Foreign Investment in the United States (CFIUS) take into consideration the “potentially harmful consequences that could occur as a result” after the sale to the Chinese firm.

A foreign company needs the approval of CFIUS, which is composed of several government agencies that considers national security concerns, to finalize a deal.

Wanxiang’s attorney Sidley Austin expressed the company’s desire to submit its bid to CFIUS.

The letter of the senators also voiced out their concern that the Chinese firm may get taxpayer-backed assets from A123, which was given a bailout funding by the Obama administration of about $249 million.

“The transfer of assets, technology and intellectual property, developed with American tax dollars, to a foreign company would be irresponsible,” the letter added.

The government has taken the matter to the court by arguing that A123 cannot be sold without its permission because it received government funding from the Energy Department.

The United States government did not reveal its intended buyer in a court filing, although the administration has been keen to note that no government grant would be allowed to be used for building facilities out of the country.

Before filing for bankruptcy in October, A123 has received almost 50% of the promised government grant.

A123 initially planned to sell the company to Johnson Controls for about $125 million. Such planned sale is still subject to bids at an auction this month. Auto-parts supplier Wanxiang said it will submit its bid.

The intended purchase by the Chinese firm has also met some resistance from some members of the United States Congress.

source: reuters

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