Monday, March 28, 2011

A123 plans new stock, bond offerings

By Kyle Alspach

A123 Systems Inc. (Nasdaq:AONE) announced proposals for a new public stock offering and new bond offering Monday, which together would raise more than $260 million based on the current share price.

The Watertown-based company, a maker of lithium-ion batteries for electric vehicles and other applications, would use the funds for general corporate purposes, according to a filing with the U.S. Securities and Exchange Commission. Those purposes could include acquisition of companies, repayment and refinancing of debt, working capital and capital expenditures, according to the filing.

A123 said the stock offering would consist of 18 mllion shares of common stock. Shares in the company closed at $7.82 on Monday, meaning the offering would have a value of about $140.8 million at the current market price.

Concurrently with the stock offering, A123 plans to offer $125 million of convertible subordinated notes due 2016. The interest rate, conversion rate and other terms of the convertible notes will be determined at pricing, the company said.

The two offerings are not contingent upon each other, according to A123.

The company said that Deutsche Bank Securities Inc. and Goldman Sachs & Co. are acting as joint bookrunning managers. Morgan Stanley and Barclays Capital are acting as joint lead managers, and Lazard Capital Markets and Pacific Crest Securities are acting as co-managers for the offerings.

A123 said it intends to grant the underwriters a 30-day option to purchase up to an additional 2.7 million shares of common stock, and up to $18.75 million aggregate principal of the convertible notes.

A123 recently said it has has been chosen to produce battery packs for a pure-electric vehicle by a “major” North American automaker, which is expected to hit the market in 2013. The company said it will be producing the battery packs at the company’s factory in Livonia, Mich., and the company began delivering engineering battery packs late last year. The North American automaker was not named.