Aug. 31 (Bloomberg) -- Solyndra Inc., a maker of solar modules that received a $535 million loan guarantee from the U.S. Energy Department, suspended operations and plans to file for bankruptcy, saying it couldn’t compete with larger rivals.
The closely held company will seek Chapter 11 protection, Fremont, California-based Solyndra said today in a statement. It didn’t say how much it owes to creditors.
Solyndra is the third U.S. solar manufacturer to fail in a month as falling panel prices and weak global demand are driving a wave of industry consolidation. President Obama visited Solyndra’s factory in May 2010 to promote investments in renewable energy and its closure will provide fuel to critics of his policies.
“Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers,” the company said in the statement. Its problems were exacerbated by a global glut of solar panels and slowing demand “that in part resulted from uncertainty in governmental incentive programs in Europe.”
The company will likely file for bankruptcy in Delaware next Wednesday, Spokesman David Miller said in an e-mail, while it evaluates options including selling itself or licensing its technology. About 1,100 full-time and temporary employees have been dismissed, effective immediately.
It may have trouble finding a buyer, said Adam Krop, an analyst at Ardour Capital Partners in New York. “I don’t see anyone swooping in,” he said today in an interview. “I don’t see this technology as very viable in the long-term. I see someone maybe buying the facility.”
Technology Not ‘Scalable’
Solyndra produces cylindrical panels that convert sunlight into electricity using copper-indium-gallium-diselenide thin-film technology. Standard solar panels are flat.
“Manufacturing and assembly costs associated with a Solyndra module aren’t particularly scalable,” Krop said.
The company has borrowed $527 million of the $535 million Energy Department loan guarantee, Damien LaVera, the agency’s press secretary, said today in an e-mail.
Solyndra plans to include the Energy Department loan guarantee in its bankruptcy filing.
Solyndra’s failure shows that the White House’s renewable energy policies are misguided, said two Republican congressmen.
“It is clear that Solyndra was a dubious investment,” representatives Fred Upton, of Michigan, and Cliff Stearns, of Florida, said in a joint statement. The company “is just the latest casualty of the Obama administration’s failed stimulus.”
Not every investment in start-up companies is expected to pay off, Dan Leistikow, director of the Energy Department’s Office of Public Affairs, said today in an article on the agency’s website. “The changing economics have affected a number of solar manufacturers in recent months, including unfortunately, Solyndra,” he said. “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed.”
Rep. Henry Waxman, a California Democrat, reiterated that. Recent bankruptcies of U.S. solar companies are a warning and “we should be doing everything possible to ensure the United States does not cede the renewable energy market to China and other countries,” he said in an e-mailed statement.
SpectraWatt Inc., a solar company backed by units of Intel Corp. and Goldman Sachs Group Inc., filed for bankruptcy protection Aug. 19, and Evergreen Solar Inc. did so Aug. 15.
Solyndra canceled in June 2010 plans to raise as much as $300 million in an initial public offering.
Solyndra’s backers include Argonaut Private Equity, GKFF Investment, CMEA Ventures, Redpoint Ventures, Rockport Capital Partners LLC, US Venture Partners, Virgin Green Fund, and Artis Capital Management LP, according to the company’s December 2009 IPO filing.
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