A Massachusetts electric-car battery maker that got $240 million in U.S. government stimulus money is being saved from bankruptcy by a Chinese billionaire who could move the company overseas, FoxNews.com reported.
A123 Systems received a $241.1 million grant from the Obama administration three years ago and more than $125 million in Michigan state tax credits in the hopes that the company would create jobs.
"It’s money that we’ll never get back," Jarrett Skorup, a research associate with the Mackinac Center for Public Policy, said of the Obama administration, FoxNews.com reported.
"It was grant money so there were not a lot of strings attached to it."
"The problem is that policymakers decided to be in the business of picking economic winners and losers and unfortunately they've picked the losers far too often."
China's Wanxiang Group — owned by Chinese billionaire Lu Guanqiu — agreed in a tentative deal last August to invest $450 million in the company with the aim of gaining an 80 percent stake in the firm.
Despite financial support from Washington, the company lost an estimated $857 million, laid off workers, recalled its products and saw its stock price plunge to 26 cents this week from $4.44 a year ago.
Some experts say the Waltham, Mass.-based company may close up shop in the U.S. and open for business in China.
"Because of the weight of the batteries, it's much more cost effective to manufacture where they're going to be used in the vehicles," Pike Research analyst John Gartner told the Detroit Free Press.
Others questioned the deal — and the value of the company.
"It's not clear what the Chinese are going to get out of this," said Theodore O'Neill, founder of Connecticut-based Litchfield Hills Research and a former securities analyst who tracked A123, the Detroit Free Press added.
"There isn't any value here. There really isn't enough need for the product, and the product isn't profitable."
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