Friday, April 1, 2011

A123 prices $223M stock and bond offering

By Kyle Alspach

A123 Systems Inc. (Nasdaq:AONE) announced the pricing of its stock and bond offerings Friday and said it expects net proceeds of at least $223.3 million from the offerings.

The Waltham-based company, a maker of lithium-ion batteries for electric vehicles and other applications, plans to 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 it has priced its offering of 18 million shares of common stock at a price of $6 per share, below the $6.35 closing price from Thursday. The company expects net proceeds of $102.7 million from the offering, or $118.2 million if underwriters exercise their option to buy additional shares.

Concurrently with the stock offering, A123 plans to offer $125 million of convertible subordinated notes due 2016. The company said the notes will bear interest at a rate of 3.75 percent per year, payable on April 15 and October 15 of each year. The initial conversion rate is about 138.9 shares of common stock per $1,000 aggregate principal amount of convertible notes, equal to about $7.20 per share — a premium of about 20 percent over the price of the new common stock offering.

A123 expects net proceeds from the bond offering will be $120.6 million, or $138.8 million if the underwriters opt to buy additional notes.

The stock and bond offerings are expected to close on April 6, the company said.

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 recently announced 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.

A123 said it will be producing the battery packs at its factory in Livonia, Mich., and the company began delivering engineering battery packs late last year. The North American automaker was not named.