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Chinese Firm to Provide A123 Funds

AONE +2.26% the electric-car battery maker that recently filed for bankruptcy, is seeking emergency approval to tap a $50 million loan provided by a Chinese auto parts maker to fund its Chapter 11 case pending an auction of the clean energy firm.

Lawyers for A123 Systems said Sunday in a bankruptcy court filing that Chinese auto parts maker Wanxiang Group Corp. will provide the so-called debtor-in-possession financing, replacing initial lender Johnson Controls Inc. JCI -1.34%

Wanxiang’s bankruptcy loan, which cuts the interest rate to 12% from 15% from Johnson Controls’ initial offer, comes as a bidding war heats up between the two companies vying for the Massachusetts-based battery maker’s assets.

Wanxiang is still eager to buy A123, which filed for Chapter 11 after receiving nearly $250 million in government grants, despite having been left at the altar earlier this year when a previous deal collapsed.


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