U.S. Rejected Solyndra Restructuring Bid Before Shutdown, Committee Finds
The Energy Department rejected Solyndra LLC’s request to restructure a U.S. loan deal, a day before the solar-panel maker shut down, according to a memo from Republicans on the House Energy and Commerce Committee.
The company, which received a $535 million federal loan guarantee in 2009, was notified on Aug. 30 that restructuring the loan six months after renegotiating the agreement “was not feasible,” according to the memo, posted on the committee’s website today before a Sept. 14 hearing. Solyndra said the next day that it would cease operations and seek bankruptcy protection.
Solyndra’s financial troubles prompted auditor PricewaterhouseCoopers LLC in March 2010 to question the company’s ability to continue. Energy Department officials last year said they would refuse further disbursement of U.S. funds unless the company obtained additional capital, according to the memo.
The company and investors Argonaut Venture Capital and Madrone Capital Partners negotiated the agreement with the U.S. starting in December, according to the memo.
The investors agreed in February to create a $75 million credit facility with the option of another $75 million. Solyndra was required to provide information about its cash flow to the Energy Department. The agreement gave the department an “observer” seat on Solyndra’s board.
Energy Department officials told committee aides last week that Solyndra was preparing in July to restate some projected financial statements “to reflect increasing market and pricing pressures on its products, resulting in decreased revenues,” according to the memo.
Solyndra’s investors sought a second restructuring of the debt deal as a condition of providing the second $75 million.
The Energy Department “determined that a second restructuring was not feasible, and informed the company and its investors of this on August 30, 2011,” the memo states. Solyndra filed for bankruptcy protection on Sept. 6.
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