Solyndra, feds knew risks, official says
Blames company’s bankruptcy on falling solar prices, global recession
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.