A123 Systems, Inc. : A123 Systems Announces Private Offering of $50 Million of Convertible Notes and Warrants

WALTHAM, Mass., May 11, 2012 (GLOBE NEWSWIRE) -- A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries and systems, today announced a private offering of $50 million aggregate principal amount of its Senior Unsecured Convertible Notes and Warrants to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Act"). The Company intends to use the proceeds from the sale of the Notes for general corporate purposes.  

The Notes will bear interest at a rate of 6.00% per year, subject to certain adjustments, and mature in July, 2013. The Notes will be convertible, at the holder's option, into shares of the Company's common stock initially at a fixed conversion price, subject to certain adjustments. The Company will be required to redeem 1/28th of the principal amount of Notes, subject to certain adjustments, semi-monthly. Interest and amortization payments may be settled in common stock of the Company, subject to certain conditions. Holders of the Notes will also have certain number of optional voluntary conversion rights.

Holders of the Notes will have the right to require the Company to redeem up to $25 million aggregate principal amount of the Notes if the Company does not obtain stockholder approval to issue an additional number of shares of the Company's common stock in connection with conversion of the Notes and interest and amortization payments settled in common stock of the Company by June 30, 2012.

In conjunction with the Convertible Offering, the Company shall issue warrants equal to 30% of the number of shares of Common Stock the Investor would receive if the Notes were converted in full at the initial Conversion Price. The Warrants expire in May 2017.

The offering is expected to close on or about May 18, 2012, subject to the satisfaction of customary closing conditions.

This press release shall not constitute an offer to sell nor a solicitation of an offer to buy any of these securities, nor shall there be any offer, solicitation or sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.

About A123 Systems

A123 Systems, Inc. (Nasdaq:AONE) is a leading developer and manufacturer of advanced lithium-ion batteries and energy storage systems for transportation, electric grid and commercial applications. The company's proprietary Nanophosphate® technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density, increased safety and extended life. A123 leverages breakthrough technology, high-quality manufacturing and expert systems integration capabilities to deliver innovative solutions that enable customers to bring next-generation products to market. For additional information please visit www.a123systems.com.

The A123 Systems, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6600

Safe Harbor Disclosure

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors, including statements with respect to the closing of the offering and the expected use of proceeds from the offering. Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: delays in the development of A123's products, delays in the scale-up, revalidation and increased efficiency of A123's manufacturing capacity, delays in A123's production ramp, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which A123 operates, and other risks detailed in A123 Systems' 10-K for the year ended December 31, 2011 and other publicly-available filings with the Securities and Exchange Commission. All forward-looking statements reflect A123's expectations only as of the date of this release and should not be relied upon as reflecting A123's views, expectations or beliefs at any date subsequent to the date of this release.

CONTACT: A123 Systems PR Contact: 

         A123 Systems

         Dan Borgasano

         617-972-3471

         [email protected]

         

         A123 Systems IR Contact:

         ICR, LLC

         Garo Toomajanian

         617-972-3450

         [email protected]

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