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Solyndra Gave Accurate Description, Restructuring Officer Says

Solyndra LLC, the solar-panel maker that received a $535 million U.S. Department of Energy loan guarantee, conveyed accurate information about its finances to the government before the company failed, its chief restructuring officer said in a report.

R. Todd Neilson, a forensic accountant and former FBI special agent, found that the company submitted proper documentation to the Department of Energy and kept officials apprised of its financial health, according to the report filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.

“The DOE had sufficient information to understand the risks” associated with the guarantee and “make an informed decision as to the ongoing financial condition of Solyndra,” said Neilson, a director at Berkeley Research Group LLC.

Neilson made no findings in the 205-page report regarding a grand jury criminal investigation being conducted by the U.S. Attorney’s Office in San Francisco and the Justice Department. Solyndra, based in Fremont, California, sought Chapter 11 protection Sept. 6. Two days later, its offices were raided by the U.S. Federal Bureau of Investigation.

Neilson said the loan application process took 2 1/2 years, beginning in December 2006 during the Bush administration. The Energy Department made Solyndra the first recipient of the loan-guarantee program in September 2009 under the Obama administration.

Solyndra submitted “materially correct” financial data to the department and “all funds drawn under the DOE loan guarantee were spent in accordance with the relevant loan documents,” Neilson said.

Chinese Competition

Solyndra’s collapse was spurred by competition from manufacturers in China, where government subsidies drove down the cost of polysilicon used in rival solar technologies that comprise 80 percent of the market, Neilson said.

“Panel manufacturers using polysilicon were able to reduce the cost and price of their panels substantially,” Neilson said. “Unfortunately Solyndra’s total costs of production, including materials, did not experience a commensurate reduction, which was devastating.”

For Solyndra to survive, the average sale price per watt, or ASP, would have needed to remain the same as when it entered the market, or about $3.30, Neilson said. Instead, the price plunged to $1, he said.

“This rapid drop in ASP was probably the greatest contributor to Solyndra’s failure,” Neilson said.

Europe Recession

The recession in Europe, one of the solar industry’s biggest markets, further slowed sales, he said. The company generated sales that were less than half of the amount it had forecast, while manufacturing and operating costs were about twice as much as originally estimated, Neilson said.

The solar-panel maker listed about $854.1 million in assets and about $867.1 million in debt in court papers filed Oct. 31.

Private investors including Argonaut Ventures, the investment arm of billionaire Obama fundraiser George Kaiser’s charitable organization, stand to lose almost $1.2 billion from Solyndra’s collapse, Neilson said.

The case is In re Solyndra LLC, 11-12799, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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