Lithium Ion battery maker A123 Systems (NASDAQ:AONE) recently said in its 8K filing with the SEC that many events have raised “substantial doubt on [its] ability to continue as a going concern.”
Back on March 26, A123 started a project with an estimated cost of $51.6 million to replace battery modules and packs that contained defective prismatic cells made at the company’s Livonia, Michigan facility. The defection could’ve meant a very premature failure of packs and modules while also resulting in decreased performance and lower battery life.
Its because of this program, in addition to the charge for its existing prismatic cell inventory that could be defective, the company has to essentially rebuild its entire inventory.
A couple of weeks ago, A123 changed its revolving credit facility with its lead bank, eliminating the borrowing facility and providing for up to $15 million as security for letters of credit. Additionally, every single outstanding letter of credit has to be cash collateralized at 105% of the face amount.
Bottom line: A123’s days are getting darker and darker.
A123 Systems (NASDAQ:AONE) Can’t Catch a Break originally appeared in Green Chip Stocks. Green Chip Review is a free 2x-per-week newsletter, is the first advisory to focus exclusively on investments in alternative and renewable energies.