A123 Direct Share Offering Comes at a Price (AONE)

A123 Systems, Inc. (NASDAQ: AONE) is raising capital to further its efforts in Nanophosphate lithium ion batteries and systems.  The company has entered into a definitive agreement to sell 12.5 million shares directly to an institutional investor in units priced at $2.034 per unit.  These units will consist of 1 share and 1 warrant.  Each warrant has an exercise price of $2.71 per share, and can be exercised after six months of the closing and up to a period of 24 months after the date on which they become exercisable.

The amount of capital raised is approximately $25.4 million, but net proceeds after placement fees will come to roughly $23.5 million. Lazard Capital Markets LLC served as the sole placement agent for the offering.

A123 has the right, subject to certain conditions, to require the investors to purchase in each such period up to an additional 6,250,000 shares of common stock, for an aggregate of up to 12,500,000 additional shares of Common Stock. The sale price for the additional shares will be based on a fixed 10% discount to a VWAP measurement at the time A123 exercises each such right. A123 cannot require the investor to purchase more than $100,000,000 of additional shares.

Shares are trading down over 8% at $2.06 against a 52-week trading range of $1.51 to $10.08.