Solyn­dra, feds knew risks, of­fi­cial says

Blames com­pany’s bank­ruptcy on fall­ing so­lar prices, global re­ces­sion

The Washington Times Daily - - Politics - BY JIM MCELHATTON

The fed­eral gov­ern­ment and pri­vate in­vestors knew the risks they were tak­ing when they poured money in Solyn­dra LLC, the Cal­i­for­nia so­lar panel man­u­fac­turer that went bank­rupt two years af­ter win­ning more than a half-bil­lion dol­lars in fed­eral loan guar­an­tees, ac­cord­ing to the com­pany’s top of­fi­cial.

But Solyn­dra’s re­struc­tur­ing of­fi­cer, R. Todd Neil­son, in a re­port Tues­day found no wrong­do­ing by the com­pany and blamed its fast col­lapse not on mis­man­age­ment but fall­ing so­lar prices and a global re­ces­sion that cut into de­mand for Solyn­dra’s pan­els.

“Solyn­dra’s in­vestors and lenders were well ad­vised of these risks fac­ing the com­pany,” Mr. Neil­son wrote in a lengthy re­port filed in U.S. Bank­ruptcy Court in Delaware.

While a fed­eral crim­i­nal in­ves­ti­ga­tion into the com­pany re­mains ac­tive, Mr. Neil­son’s re­port con­cluded that con­struc­tion costs were cor­rectly recorded and that “no ma­te­rial funds were di­verted from their orig­i­nal use.”

Mr. Neil­son also said the Depart­ment of En­ergy, which awarded the loans, had “suf­fi­cient in­for­ma­tion” to un­der­stand the risks fac­ing Solyn­dra and its on­go­ing fi­nan­cial con­di­tion. His re­port de­tails the com­pany’s down­fall from the “buoy­ant at­mos­phere” around the time of Solyn­dra’s “pre-ap­pli­ca­tion” with the DOE in 2006 to its bank­ruptcy pe­ti­tion last year.

“Un­for­tu­nately, as Solyn­dra moved closer to break­ing ground on Fab 2 Phase 1, which would vastly in­crease its man­u­fac­tur­ing ca­pa­bil­ity, the so­lar mar­ket ex­pe­ri­enced sig­nif­i­cant change,” the re­port said.

“Chi­nese man­u­fac­tur­ing ag­gres­sively added ca­pac­ity at un­prece­dented rates which had the ef­fect of push­ing prices of con­ven­tional flat pan­els down­ward, which also neg­a­tively im­pacted the prices at which Solyn­dra could sell its prod­uct.”

Ul­ti­mately, Solyn­dra’s decision to move ahead build­ing its Fab 2 fa­cil­ity, funded by more than a half-bil­lion dol­lars in fed­eral loan money and $195.2 mil­lion from pri­vate in­vestors, proved to be piv­otal to the com­pany’s fu­ture, ac­cord­ing to Mr. Neil­son.

“It was the com­pany’s best hope for suc­cess, but ul­ti­mately, along with other fac­tors, led to its demise,” he wrote.

At the same time the com­pany was build­ing an ex­panded pro­duc­tion fa­cil­ity, mar­ket changes were re­duc­ing prices and cash flow from sales so that the only way to sur­vive, other than more money from in­vestors, “lay in mas­sively in­creased vol­umes,” Mr. Neil­son wrote.

In the end, how­ever, the busi­ness plan fell apart. And Mr. Neil­son noted that some of the com­pany’s tar­gets “proved to be ag­gres­sive,” es­pe­cially when the so­lar mar­ket was in fast de­cline in 2010 and 2011.

Mr. Neil­son said the com­pany’s bonus pay­outs, which have re­ceived scru­tiny in the months af­ter its bank­ruptcy, were “within ma­te­ri­ally ac­cept­able lim­its.”

Texas Reps. Ted Poe, a Re­pub­li­can (left), and Henry Cuel­lar, a Demo­crat, have asked De­fense Sec­re­tary Leon E. Panetta for Mideast war sur­plus to beef up the U.S. bor­der with Mex­ico.

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