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Topic - Alternative Energy
Subject - Solyndra Fades Away

September 1, 2011
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Solyndra Fades Away

 

By Dan Primack August 31, 2011: 1:49 PM ET Image

Fortune.com

One of America's most expensive cleantech bets just bit the dust.

Solar panel maker Solyndra today said that it will file for Chapter 11 bankruptcy protection, after failing to successfully compete against lower-cost Chinese manufacturers. It is one of largest failures ever suffered by venture capitalists, and a major black eye for a U.S. Department of Energy that loaned the company more than $500 million.

The company has not yet filed its bankruptcy papers, but did say in a press release that it plans to evaluate options that could include a sale of its business and licensing of its technology. It also said that 1,100 full-time and part-time employees will be laid off, effective immediately.

Since being founded in 2005 to build solar panels for commercial rooftops, Solyndra had raised nearly $1 billion in private equity financing. The biggest backer was the George Kaiser Family Foundation, which was listed as holding more than a 35% equity stake when Solyndra filed for a $300 million IPO in late 2009 (it would later cancel the offering, due to "adverse market conditions). Other significant shareholders included Madrone Partners, a VC firm affiliated with Wal-Mart's Walton family, with an 11% stake, U.S. Venture Partners (10.19%), RockPort Capital Partners (7.5%),  CMEA Ventures (6.81%) and Redpoint Ventures (5.94%).

Some of those positions were subsequently diluted, when a new debt financing this past spring reportedly converted certain existing shares from preferred into common.

Solyndra's $535 million loan guarantee was made in 2009 by the Department of Energy, and has since come under scrutiny by House Republicans who have suggested that not enough due diligence was conducted. DoE already is pushing back against the meme today, with a blog post that argues the company was felled, in part, by slashed European subsidies for solar cells (an argument Solyndra CEO Brian Harrison also makes in the company's press release).

What DoE does not discuss, however, is that Solyndra's products were far more expensive than the typical solar maker -- offering a long-term value proposition with high up-front costs. "Solyndra really bet on changing how solar is installed," says Rob Day, a cleantech venture capitalist and blogger. "It was an interesting idea that just didn't work out."

A source tells Fortune that Solyndra has called down $527 million of the DoE loan guarantee, after meeting a variety of performance and financing milestones (including the building of a manufacturing facility). The final check arrived earlier this summer.

DoE's loan guarantee was "secured by a first priority security interest," which would seem to imply that DoE is high on the list of creditors (we'll know for sure when the bankruptcy doc is filed next week). The VCs, on the other hand, may well be washed out (particularly those holding common stock).

[Update: A source says that the $75 million debt that Solyndra raised earlier this year would be repaid before repaying DoE]

DoE declined to comment beyond its blog post. Solyndra and its VCs have not yet responded to Fortune's calls.

 

 

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Comments
  • This is sad that another American corporation goes under, especially when it's in a thriving market. I have always made the effort to buy American and you should to, seems to me there more to their loss then just sales. Did the top members take from the kittie before there was one. Losses that big are more than suspicious. PV

    perry vogler  September 3 2011, 8:33 am EDT
    Reply to this comment

  • Solyndra losses due to upper management failure. This company was a nightmare to deal with. Excellent product that the chinese will replicate and sell to us for large dollars since they won't last like the originals.

    1100 jobs gone and will those workers have jobs ? No jobs for these people due to the fact that the illegal is doing jobs that AMERICANS WON'T ? I bet that most of these people would do any job right now to keep money coming in the door.

    SHIP THE ILLEGALS HOME NOW!!!!!!

    Kim W  September 2 2011, 9:12 am EDT
    Reply to this comment

  • Once again the federal government sticks its nose in the private sector and the tax payers will foot the bill.

    DAVE S  September 2 2011, 8:23 am EDT
    Reply to this comment
  • Reply from: Flying Sparks   September 2 2011, 10:11 am EDT
    Ever hear of Small Business Loans? A huge number of businesses in this country got their initial boost form "The Government".

    Many, or most, government programs do an excellent job and do it very efficiently. It's the red herrings that make the news.

    It’s easy to blame all the problems in the world one thing, but its just not that simple.
    Reply to Flying Sparks

    Reply from: Andy   September 2 2011, 11:25 am EDT
    It is not the govenments place to use "our money" (those of us that pay taxes) to loan or give to anyone (person or company) The purpose of government is to secure the opprotunity that everyone (person or company) has the equal opportunity to try and secure for themselves -life , liberty and the presuit of happiness. no one promised our forefathers anything other that such, and they prevailed. if you have money and want to invest it into a venture of your neighbors - i support your freedom to do so. That is the Americam Way! America must get rid of the entitlements! To the white male SBA doesn't offer much.
    Reply to Andy


  • ((Solar panel maker Solyndra today said that it will file for Chapter 11 bankruptcy protection, after failing to successfully compete against lower-cost Chinese manufacturers. It is one of largest failures ever suffered by venture capitalists, and a major black eye for a U.S. Department of Energy that loaned the company more than $500 million.))

    When are we going to learn. We cannot compete with China on price. Since our economy is price driven it adds another layer to the problem. Unfortunately we can only control the price of our goods by trying to use the cheapest labor available in this country which happens to be here illegally from Mexico and our political hacks in Congress have done NOTHING to resolve that problem.

    Now there are so many people of Mexican decent in this country that all elected politicians are afraid to take action to stop or return the illegals for fear that they will not get the people of Mexican descents vote for re-election. I do not want to make it out that I do not like people from Mexico it is just the illegals that concern me along with all the costs involved with them being in this country. This entire situation should have been stopped years ago but no one has the courage to take a real stand on this issue.

    Sorry about the rant but sometimes you just get sick and tired of being sick and tired of the situation.

    Mike  September 2 2011, 8:09 am EDT
    Reply to this comment

  • What about all of the misled costomers owning these panels thinking they have a 25year warranty, or misled tax payer financing this indeaver. They will reopen - just a shift in power/money.

    Andy  September 2 2011, 6:10 am EDT
    Reply to this comment

  • Excellent to see that companies trying to rip off Americans with over priced products are driven out of business. Any further information on who within the company set the pricing? Did they overvalue the opinion of the IRS that businesses installing rooftop units could take a deduction for a new roof (and build that factor in the pricing)? Curious, that with the Wal Mart family involved, pricing was not given more careful consideration.Oil companies, utilities and must be overjoyed to see these failures publicized.

    Certain parties on Wall Street should be also delighted as shown in the recent exposure of Goldman Sachs (subsidiary) efforts to slow solar development via our BLM (do a search on the AP wire article) in the area of the most abundant sunshine in the US (desert). Not that solar farms are the answer to America solving the job problem -actually they seem to offer only short term employment solutions -with long term monopolistic control.

    Where will the patent rights go for the cylindrical cells that Solyndra was making? These could supposedly capture sunlight from any direction. The technology would seem to be perfect for a rooftop that was not south facing. Will the solar ink developers incorporate it (or similar characteristics) into their products?

    Ralph  September 2 2011, 2:20 am EDT
    Reply to this comment
  • Reply from: Tom   September 2 2011, 9:06 pm EDT
    Curious to understand how a government subsidized product is considered fair pricing. How is a private company supposed to compete in a market that is fueled by products made at one tenth the labor costs.
    Reply to Tom


  • You can't compete with government subsidies. As a private venture, realistic pricing of a product cannot compete with the artificial pricing allowed by having a government subsidising the price of the product.

    Tom  September 2 2011, 12:49 am EDT
    Reply to this comment


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