A123 plans $175 million IPO in 3-6 months

By Soyoung Kim

TRAVERSE CITY, Michigan (Reuters) - Battery maker A123 Systems expects to go public in the next three to six months through a planned $175 million initial public offering, its chief executive said on Friday.

A123, which is competing to supply next-generation lithium-ion batteries for General Motors Corp's (GM.N: Quote, Profile, Research, Stock Buzz) all-electric Chevy Volt, is "strongly considering" building a U.S. battery manufacturing facility, Chief Executive David Vieau told Reuters on the sidelines of an industry forum.

Watertown, Massachusetts-based A123 filed for an initial public offering last week to raise as much as $175 million. It had not detailed the expected timing of its market debut.

"That has to assume everything happens according to the schedule but certainly in three to six months," Vieau said when asked about the timing.

A123 plans to use the proceeds from the IPO to expand manufacturing facilities and pay off debt.

A123 is paired with Germany's Continental AG (CONG.DE: Quote, Profile, Research, Stock Buzz) in a joint bid to provide lithium-ion battery packs for GM's heavily touted plug-in hybrid.

Under the deal, A123 would supply battery cells while Conti would build them into the 400-pound, T-shaped battery packs that the Volt will require.

The two companies are in competition with South Korea's LG Chem (051910.KS: Quote, Profile, Research, Stock Buzz) for the closely watched Volt contract.

GM has said it will name a battery supplier this year to meet the 2010 launch target for the Volt.

"It's a very close and competitive situation," Vieau said, referring to the Volt battery contract. "Nothing has been determined yet."

A123 currently has manufacturing facilities in South Korea and China, but is looking at building U.S. manufacturing facilities to supply GM and other U.S.-based manufacturers.

"There is a strong consideration given to that," Vieau said.

A123's long-term plan is to have manufacturing capacity in Europe as well to supply European automakers, Vieau said, citing analyst projections that the lithium-ion battery market will grow to $20 billion by 2020.

In a market reeling from high fuel prices, GM has a lot riding on the Volt, which it is racing to bring to market before rivals have an all-electric equivalent on the road.

Skeptics have raised questions about the electric cruising range for the Volt, as well as the cost of the battery pack, which is estimated to add about $10,000 to the price of a vehicle.  Continued...