In February of this year, Solyndra took on $75 million of new debt, with conditions:
The new financing also included the restructuring of the Company’s outstanding indebtedness. Solyndra’s existing convertible notes have been exchanged for new notes and the U.S. Department of Energy which provided a loan guarantee agreed to certain loan modifications including an extension of the amortization period. Together with the existing indebtedness, the new credit facility is secured by all assets of the Company.
The question is: How much of the now bankrupt Solyndra do taxpayers actually own? Whatever it is, it’s less than I thought. We need more details on this “investment.”
Also from the press release above is this glowing description of Solyndra’s business:
The company’s construction of its new, world-class manufacturing and customer demonstration facility is complete. The 300,000 square foot project was completed ahead of schedule, employing approximately 3000 construction workers. Installation of the remaining production tools occurs in 2011 and will bring Solyndra’s annual production run rate to approximately 200 MW per year by year’s end. When fully ramped, the new facility’s annual production capacity will reach 300MW per year. The new facility will also enable Solyndra to manufacture products with an installed system cost-of-goods sold (COGS) of approximately $2 per watt in the first quarter of 2013, which is expected to be highly competitive with all other technologies.
“We are confident that with this round of funding and the continued support of our existing investors we are on track to be cash flow positive at the end of this year,” continued Harrison. “Solyndra’s fast and easy to install panels are a proven and scalable solar solution, ideal for rooftop applications. Today we are demonstrating competitive ’all in’ pricing, strong ROI and economics for rooftop owners, and many enthusiastic new and repeat customers.”
Yet, today, the DOE says Solyndra went out of business because of the Chinese:
A White House spokesman referred questions to the Energy Department, which said less expensive solar panels from subsidized Chinese companies hurt Solyndra’s chances of survival.
I asked in 2009 why the DOE was making this investment. Goldman Sachs, who was advising the DOE on the Solyndra purchase, had just downgraded the solar industry as a whole, warning of an over-supply:
4. Goldman Sachs downgraded the solar industry last year. Barrons reports from October 2008:
Solar stocks are trading sharply lower this morning after Goldman Sachs analyst Michael Molnar declared he has become cautious on the solar group, “as less generous subsidies combined with a wave of supply pose a real risk.”
Molnar asserts in a research note that the risk of oversupply in the solar market “will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market.” He thinks that “liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future givne fears of their ultimate cost in a bad world economy.”
As supply increases, he contends, prices will have to “adjust strongly downward to generate demand.” He thinks that trend will lead to below-consensus estimates for module manufacturers and compressed valuations for stocks in the sector.
Since Goldman was advising Solyndra on this project, did anyone in Chu’s Department of Energy question why taxpayers are guaranteeing the debt on a new solar plant for a market that Goldman’s own analysts have downgraded? Has President Obama’s election changed Goldman’s view on alternative energy to the point that it is now recommending the sector?
Clearly, the DOE wasn’t smart enough to think that China might figure out a way to make solar panels cheaper.
The bankruptcy raises questions about the ”deals” Solyndra announced on its website. In the wake of the bankruptcy decision, Congress needs to look at these contracts to see if any of them were ever real.