Just before President Obama visited the Solyndra plant in May of 2010, the White House arranged a conference call between reporters and three administration officials: Jared Bernstein, Chief Economist to the Vice President, Matt Rogers, Senior Adviser to the Secretary of Energy, and Elizabeth Oxhorn, Spokeswoman for the Recovery Act. The transcript of this conference call doesn’t seem to be available on the Web, but you can find it on Nexis.
The whole transcript makes for interesting reading in light of the Solyndra fiasco, but one question in particular catches the eye. An unidentified reporter asked about the negative audit of Solyndra. The reply by Matt Rogers underplays the significance of the audit and is much too optimistic about the ability of the loan to attract private capital and assure the success of the IPO. There’s no dramatically new information here, but it’s interesting in light of what’s happened since to look back on the administration’s response to a direct question about Solyndra’s shaky financial footing just before President Obama visited the firm.
Q Hello. I want to see if either of you can talk about the financial stability of Solyndra and if you’re aware of a — apparently there was an audit by PriceWaterhouseCoopers in March, which expressed some concern about their ability to continue as a going concern.
MR. ROGERS: (So this is the ?) — the letter that PriceWaterhouseCoopers issued is a standard letter that most companies that have not yet gone public, have not yet had an IPO, tend to receive. They’re called a going concern letter. And what it simply says is, your company requires more capital in order to make sure that you are successful over the long term. The reason they filed for an IPO, the reason that they’ve gone to the private capital markets is in fact to raise that additional capital.
The good news, again, is that when the federal government plays its role and we make the conditional commitment or we make the loan, in this case, to Solyndra they are then able to go out and raise that kind of capital in the markets, which substantially increases their viability.
And what you’re seeing is by — as the president will be at the — at the construction site tomorrow, as you increase the — their capacity, all of a sudden you’re able to increase their revenue line and reduce their operating cost line, improving their margins. And so what we’ve created is a virtuous cycle in terms of the health of a — of the company.
So we’re quite comfortable with the ongoing health of the company. We do know, however, that in order for companies like Solyndra to be successful over the long term, we actually do need to make sure that we end the uncertainty and we pass comprehensive energy and climate legislation, because that kind of uncertainty and overhang over the market essentially leads people to defer making capital investments in this kind of equipment.
And so we end up hurting U.S. manufacturing the longer that we have that uncertainty in the marketplace.