taxpayers bent-over big-time in solyndra bankruptcy...,

Bloomberg | The Obama administration let $385 million in taxpayer support for Solyndra Inc. take a back seat to funds from new investors in an unsuccessful effort to keep the solar-panel manufacturer operating.

The Energy Department decided the January refinancing represented the “highest probable net benefit” for the government, according to a government document obtained by Bloomberg News. Investors provided the company $75 million that became senior debt, ahead of all but $150 million of the federal government’s stake.

Solyndra said on Aug. 31 that it will file for bankruptcy reorganization next week in Wilmington, Delaware. The administration’s agreement to subordinate the government aid to new investment may add fuel to criticism by Republicans who have said President Barack Obama spent too much money pushing a favored company in the name of green energy.

“Solyndra is just the latest casualty of the Obama administration’s failed stimulus,” Republican Representatives Fred Upton of Michigan, chairman of the House Energy and Commerce Committee, and Cliff Stearns of Florida said in an Aug. 31 statement. “We smelled a rat from the onset,” they said of the backing for Solyndra.

The company is evaluating options including selling itself or licensing its technology, David Miller, a spokesman for the closely held company, said this week. The company suspended operations, and about 1,100 full-time and temporary employees have been dismissed.
Mounting Troubles

Should the company be liquidated, $385 million owed to the U.S. will be subordinated to the $75 million invested this year, according to the document dated Jan. 3.

Miller didn’t return a call and e-mail sent outside business hours seeking comment on the refinancing agreement.

At the time of the January refinancing, the government had already advanced $460 million in loan guarantees and decided to continue investing in an effort to fend off threatened bankruptcy.

The document traces Solyndra’s mounting financial troubles and the Obama administration’s decision to maintain its bet on the future of the Fremont, California-based company.

By December 2010, “Solyndra had only about a month of cash on hand and faced bankruptcy absent continued funding” from the department, according to the papers.

After “a due-diligence effort” to “determine if the company still had a viable business,” the Energy Department concluded it “believes that the restructuring plan represents the best possible course of action to achieve the highest return on its invested capital.”
Liquidation Value

The company’s liquidation value of its collateral was $91 million to $99 million in December, before the refinancing, which would have provided less than a 22 percent return to the government, the document shows.

By subordinating $385 million of the government loan to $75 million from investors, the government calculated that Solyndra’s conservative enterprise value this year would be $240 million to $360 million. At what it considered a more traditional valuation multiple, the government saw the value as $480 million.

The company had tapped into the loan guarantees offered by the Energy Department to build a photovoltaic panel facility and help add 1,000 jobs, according to the papers.