FBI Raids 'Connected' Energy Firm Solyndra

[mick silver]

http://www.thedailybell.com/2907/DB-Briefs-Is-Solyndra-the-End-of-Obama-The-Sky-Is-Falling-Women-Are-Better

[Dogman]

http://www.thedailybell.com/2907/DB-Briefs-Is-Solyndra-the-End-of-Obama-The-Sky-Is-Falling-Women-Are-Better
DB Briefs: Is Solyndra the End of Obama? / The Sky Is Falling / Women Are Better

Friday, September 09, 2011 – by Staff Report

http://www.thedailybell.com/images/library/reporter-mic.gif

Is Solyndra the End of Obama?

FBI Raids 'Connected' Energy Firm Solyndra ...

The FBI has confirmed to ABC News that federal agents are conducting a search this morning at the offices of Solyndra, the now-bankrupt California solar power company that received $535 million in federal loans under a green energy program touted by President Obama. The raid is part of a joint operation between the FBI and the Department of Energy's Office of Inspector General, Public Affairs Specialist Peter D. Lee said Thursday morning. Lee said he could not disclose the reason for the raid because the matter is under seal. ... Federal auditors had flagged the loan, saying some applicants had benefitted from special treatment. One of the lead private investors in Solyndra was an Oklahoma billionaire who served as an Obama "bundler," raising money during the 2008 presidential campaign. – ABC News

Dominant Social Theme: Thank goodness America's law enforcement is on the case when it comes to corruption.

Free-Market Analysis: We are fairly cynical about modern law enforcement as those who visit here probably know. We have suggested that the modern judicial-industrial state, which is funded entirely by government, is verging on a kind of totalitarianism.

We have even suggested that people try to return to forms of private justice – taking the law into their own hands – as they did for tens of thousands of years. There was a whole system of vendettas and duels that was worked out in painful detail to ensure that people did not take advantage of others; or that if they did, they might be exposed to injurious

consequences "unto the seventh generation." This tended to concentrate the mind.
One of the most despicable things about the modern judicial system is that it is increasingly verging on the arbitrary. There are so many laws and so many penalties that law enforcement can pretty much pick and choose whom to make a criminal. We see this over and over; America's judicial system has basically become a system in which certain people are picked by the powers-that-be to be prosecuted as "an example" to others. The system deals in broken lives to warn everyone else about the penalties of opposing government power.

Within this context, one can try to read the "tea leaves" to determine whether or not certain officials are being prosecuted for agendas that have nothing to do with law enforcement. The biggest prosecution of all, of course, would be the president of the United States who likely breaks constitutional and other laws on a regular basis. The only president recently targeted by the powers-that-be (from a criminal standpoint) so far as we can tell was Richard Nixon.
But Barack Obama has been a great disappointment to the elite central banking families that want to run the world. He was supposed to be an FDR-like figure, inspiring America and ultimately the world. But he is, instead, a standoffish and unemotional man who lacks the common touch.

Have those with the real power in America decided that Obama's days are numbered? The administration has considerable exposure to Solyndra – a green solution and a prominent one. We are most surprised at this raid, given the political and economic sensitivities.
Is someone trying to send a message? Is it a proverbial shot across Obama's bow? We don't know what it portends, but this case bears watching.

[Spectrism]

They are just going there to teach the proper use of shredding machines, permanent file deletions, and hard drive swiping.

Surely they are just doing a little house cleaning and looking for "terrorists" who might oppose "the government".

[osoab]

Bruce Krasting posted about this company one day before it declared.

This was the first article on 8-31-11
Government investment disaster in the works?? (http://www.zerohedge.com/contributed/government-investment-disaster-works)

This is the 2nd article on 9-7-11
Solyndra - The Obama connection (http://www.zerohedge.com/contributed/solyndra-obama-connection)



I wrote about the solar panel manufacturer Solyndra last week; "Government Investment Disaster in the Works" (http://www.blogger.com/posts.g?blogID=7673190716670613299) I highlighted all of the negatives that the company was facing.
It was pretty clear to me that that company was facing trouble. But I had no idea that they would file Chapter 11 the very next day. (Sometimes you just get lucky)
I also made note of some scuttlebutt that George Kaiser (Oklahoma oil billionaire) was involved with Solyndra. I have been looking for a confirmation of this. Kaiser is an important link in this story. He is also a very big fund-raiser for Obama. He is often referred to as a “Bundler”. In this case that means he encouraged/pushed others to put up money for the big O’s campaign.

The Tulsa World (http://www.tulsaworld.com/business/article.aspx?subjectid=52&articleid=20110907_52_E1_CUTLIN372219) filed a story Re the Kaiser connection earlier today. (What better place to get the news than a home town paper). Quotes from the TW article:
The bankruptcy filing indicates that Argonaut Ventures, an investment arm of the Tulsa-based foundation, holds almost 39 percent of Solyndra's parent, 360 Solar Degree Holdings Inc.
Okay, so who is behind Argonaut Ventures?
In an emailed statement to the Tulsa World, a representative of the George Kaiser Family Foundation said the organization made the investment through Argonaut.
So the family foundation was the source of the money that got Solyndra going. But George Kaiser tried to distance himself from this very ugly story. A quote from a Kaiser “spokesperson”:


"George Kaiser is not an investor in Solyndra and did not participate in any discussions with the U.S. government regarding the loan".
Interesting that Kaiser is doing his level best to distance himself from the stink. But it does not work for me:
George Kaiser is chairman of BOK Financial Corp. and owner of Kaiser-Francis Oil Co. Argonaut is headed by Steve Mitchell, who also served on Solyndra's board of directors.
So Kaiser wants us to believe that the Family Foundation he runs invested some $300mm of the families “excess cash” and he did not really know about it. The guy who is running the family’s investments (Steve Mitchell) is also sitting on the board at Solyndra. And we are supposed to believe that George Kaiser was just a passive investor? Not a chance.
We have Mr. Kaiser on the record on this. Again, his words:
“George Kaiser did not participate in any discussions with the U.S. government regarding the loan".
He never spoke to Obama about this? Not even once? Not even when Obama went (twice) to the company’s manufacturing offices in Pa and CA? I don’t believe that denial.

There is one very slippery fact that I am wondering about. It has to do with subordination. This a legal issue on who gets paid first in a bankruptcy. In all cases the equity is last on the list. But that is not the situation with Solyndra/Kaiser. From Bloomberg:


In February, Solyndra and its lenders reorganized the company’s debts, putting the U.S. loan behind $69.3 million owed to other lenders, including an affiliate of Solyndra’s biggest shareholder, Argonaut Ventures.
This kind of stuff is not supposed to happen. The equity interest of the Kaiser family got a preference as to the right of repayment from Solyndra. Kaiser got in front of the line. He got in front of the US Government’s $528mm IOU from Solyndra. Kaiser got in front of the interests of the American taxpayer. There had to be some very serious arm-twisting going on in the background to achieve this feat.
.
I’ve looked at the BK filings. The company is going to sell its assets in an effort to pay of all creditors. The question is who gets paid first and what are the liquidation proceeds.

Solyndra had lousy technology. There are tons of flat panel manufactures left standing. Whatever Solyndra has for sale is not going to be worth much. I’m guessing around 20 cents on the dollar from book. The company has listed $859mm of assets. By my calculation the cash value will be under $200mm.
There are employee claims that come first. Next in line come trade creditors. Then comes the senior unsecured debt owed to Argonaut. The lawyers (There are a ton of big shots already involved) will get their pound of flesh. That leaves next to nothing for Uncle Sam. The taxpayers are going to take it in the ear for $400-500 million.

This story will hound Obama. His campaign got big bucks from a guy who ended up costing the Feds a very big penny. This is a story that could drag Obama down. He either has to step up and explain how this could have happened or he can say nothing. He has to provide some clarity on the George Kaiser connection. If he chooses to keep mum on this mess he will have to face Congressional hearings for the next 18 months. There will be a story in the paper every week or so. The Republicans will see to it. This is a story that could turn an election.

[mick silver]

i would say this is just the start of stuff thats been loan out to companys and none will ever pay back what they were loaned . you see how big companys are raping the people of this country

[osoab]

Some new stuff from Bruce Krasting on Solyndra.





Solyndra - A few new facts. A few new questions (http://www.zerohedge.com/contributed/solyndra-few-new-facts-few-new-questions)

http://www.zerohedge.com/sites/default/files/pictures/picture-2353.jpg (http://www.zerohedge.com/users/bruce-krasting)
Submitted by Bruce Krasting (http://www.zerohedge.com/users/bruce-krasting) on 09/15/2011 21:13 -0400



I have, on numerous occasions in the past, written an article that took the form of a question to readers. I present some demonstrable facts. Then I pose the question(s), "What do you think?" "What do you know?" I'm “smarter” as a result of the responses I have gotten. I think others are as well. I’m going to take this to a different level. The following questions are directed to my usual readers. They are also directed to the actors in the Solyndra story. The DOE, OMB, company execs (past and current), the equity owners, the lawyers and the MSM could chime in with an explanation. This blogger/taxpayer is seeking some clarity on the following.
There are questions of who did what to whom and when. There is an aspect to this that has not yet (to my knowledge) been discussed in the media. (Note-I tried to make this easy to follow. It isn't. Sorry)
On July 29, 2011 (just five-weeks before going bankrupt) Solyndra (“SOL”) entered into a transaction whereby it sold both the Accounts Receivables (IOUs from panels sold) and the Inventory (panels) of the company ("the A/R Transaction”). Solyndra Financial (“SOLF”) (a subsidiary of SOL) was the seller. The purchaser was a newly formed company called Solyndra Solar II LLC (“SSII”). The following is the only information that I could find about SSII. Note that the company was organized in the Sate of Delaware one-day before the sale of significant assets of SOL.

http://3.bp.blogspot.com/-Cc69HOgLwSY/TnKFxdE6NtI/AAAAAAAACdw/f3uOLdWMv-A/s400/delaware.png (http://3.bp.blogspot.com/-Cc69HOgLwSY/TnKFxdE6NtI/AAAAAAAACdw/f3uOLdWMv-A/s1600/delaware.png)
It is clear from the limited information from the bankruptcy court that the A/R transaction took place. From the SOL, INTERIM ORDER (I) court filing: (Emphasis mine)
Inventory Accounts Receivable Trust Funds. Prior to the Petition Date, Debtor Solyndra LLC (as servicer), one of its subsidiaries, Solyndra Financing LLC (as seller), Argonaut Solar LLC (as agent), and Solyndra Solar LLC (as buyer), entered into that certain Amended and Restated Purchase and Sale Agreement dated as of July 29, 2011 (the "A/R Sale Agreement"). Pursuant to the A/R Sale Agreement, Solyndra Solar LLC purchased certain of the accounts receivable resulting from the sale of the Debtors’ inventory and owns and has the right to receive the proceeds of collection of such accounts receivable. In addition, Solyndra LLC (as servicer), one of its subsidiaries, Solyndra Financing LLC (as seller), Argonaut Solar LLC (as agent), and Solyndra Solar II LLC (as buyer), entered into that certain Inventory Purchase and Sale Agreement dated as of July 29, 2011.
I have found no explanation/details for this transaction. It is clear that a purchase/sale took place. The question of how much was sold and at what price is not clear. It is also not clear what Argonaut Solar is doing in this deal. Argonaut is a name that George Kaiser uses. His family investment vehicle channeled money to SOL through a company called Argonaut Ventures. Why would a company controlled by GK have a role as Agent between the buyer and seller of SOL’s assets? A question to ask is whether GK has (directly or indirectly) an interest (equity or debt) in SSII.
Again, both receivables and inventory were sold. A question is, “Was this a material transaction?” The court docs suggest there is real money involved.
As of September 2, 2011, there was approximately $3,866,342.83 in Inventory Accounts Receivable Trust Funds being held in the Inventory AIR Purchaser Trust Accounts.
There was nearly $4mm of cash in the account! There are, no doubt, other receivables to come in the future. Clearly the sale of receivables was material.
I have no information from public documents regarding the scope of the sale of inventory. I have information from a former Solyndra employee (Yes, this person will remain anonymous). I believe that the following is factual. A third party confirmation of this is required. (Love to hear from you). With that said:
It seemed like the company had been hoarding panels in the last month. We were producing a great deal of material, but holding off on shipments.

We were stacking up panels everywhere. Our old building was packed with them, but we had some huge orders in the works. Usually we shipped most of the material in the last week of the quarter, so this was not completely unusual.
We had close to three months worth of panels and we were on track to sell about two hundred million this year. That works out to about fifty million in inventory.Make what you will of this. What is the value of inventory that is not yet sold? Answer: A fraction of the sale value referred to above. But even a small fraction is still a material number.
Argonaut (GK) has separately offered to provide a post bankruptcy loan of $4mm ("DIP"). There are many terms required by Argonaut. One requirement relates to the A/R sales. From the docs:
It is a condition to funding under the DIP Facility that the Inventory Accounts Receivable Trust Funds being held in the Inventory A/R Purchaser Trust Accounts are released to Argonaut Solar, LLC, as agent for the Inventory A/R Purchasers.
Argonaut's (very good) lawyers make their position very clear as to who owns the assets in the A/R accounts.
The Purchased Inventory (including any proceeds thereof) and the Inventory Accounts Receivable Trust Funds (including any proceeds thereof) are property of the Inventory AIR Purchasers and not property of the Debtors’ estates.
In other words, Argonaut is willing to make a new $4mm loan, PROVIDED that the Judge releases (at least $3.86m) back to an entity that Argonaut is connected to (SSII). In addition, the Judge would be functionally sanctioning the A/R sale. The inventory (whatever it is worth) and the receivables (whatever they are worth) will be excluded from the Debtors Estate. That means that there is even less of a chance that Uncle Sam sees a penny of the money that he (we) are owed.
One additional point from the unnamed ex-employee:
It seems liked Solyndra was racing to spend all the federal money right up till the end.
There are many possible explanations for the July 29 A/R sale. This could have been an arms-length transaction that was a last ditch effort to save SOL. This could also be something a bit more malodorous. I don’t know.
This is a unique bankruptcy. A significant amount of public money has been lost in a startup company. While the details of the A/R deal may be kept confidential, the question marks that this transaction raises will not go away.
Don't read this and conclude that I’m suggesting wrongdoing on anyone’s part. That’s not the case. What I’m looking for is some clarity and opaqueness. I think the country deserves that.

[osoab]

Obama's Solyndra scandal reeks of the Chicago Way (http://www.chicagotribune.com/news/columnists/ct-met-kass-0918-20110918,0,3951633.column)





The Solyndra scandal cost at least a half-billion public dollars. It is plaguing President Barack Obama (http://www.chicagotribune.com/topic/politics/government/barack-obama-PEPLT007408.topic). And it's being billed as a Washington story.

But back in Obama's political hometown, those of us familiar with the Chicago Way can see something else in Solyndra — something that the Washington crowd calls "optics." In fact, it's not just a Washington saga — it has all the elements of a Chicago City Hall story, except with more zeros.

The Solyndra scandal cost at least a half-billion public dollars. It is plaguing President Barack Obama (http://www.chicagotribune.com/topic/politics/government/barack-obama-PEPLT007408.topic). And it's being billed as a Washington story.

But back in Obama's political hometown, those of us familiar with the Chicago Way can see something else in Solyndra — something that the Washington crowd calls "optics." In fact, it's not just a Washington saga — it has all the elements of a Chicago City Hall story, except with more zeros.

The FBI (http://www.chicagotribune.com/topic/crime-law-justice/crimes/fbi-ORGOV000008.topic) is investigating what happened with Solyndra, a solar panel company that got a $535 million government-backed loan with the help of the Obama White House (http://www.chicagotribune.com/topic/politics/government/executive-branch/white-house-PLCUL000110.topic) over the objections of federal budget analysts.

Obama and Vice President Joe Biden (http://www.chicagotribune.com/topic/politics/government/joe-biden-PEPLT007548.topic) got a nice photo op. They got to make speeches about being "green." But then Solyndra went bankrupt. Americans lost jobs. Taxpayers got stuck with the bill. And members of Congress are now in high dudgeon and making speeches.

Federal investigators want to know what role political fundraising played in the guarantee of the questionable loan. Washington bureaucrats warned the deal was lousy. And White House spokesmen flail desperately, like weakened victims in a cheesy vampire movie.

So forget optics. What about smell? It smells bad, and it's going to smell worse.

Or, did you really believe it when the White House mouthpieces — who are also Chicago City Hall mouthpieces — promised they were bringing a new kind of politics to Washington?

This is not a new kind of politics. It's the old kind. The Chicago kind.

And now the Tribune Washington Bureau has reported that the U.S. Department of Energy (http://www.chicagotribune.com/topic/environmental-issues/u.s.-department-of-energy-ORGOV000021.topic) employee who helped monitor the Solyndra loan guarantee was one of Obama's top fundraisers.

Fundraising? Contracts? Imagine that.

Steve Spinner was the Obama administration official in charge of handing out billions and billions of tax dollars to "green" energy deals. According to the Tribune story, Spinner the other day invited Obama's national political finance committee to a meeting in Chicago.

The name of the Obama fundraising initiative?

"Technology for Obama."

The idea of the Obama fundraisers getting together, talking "green," and perhaps offering taxpayer loan guarantees to insider businesses in the interest of helping the environment — it all seems rather fresh.

Like a mountain meadow.

Until you realize it's the same old politics, the same kind practiced in Washington and Chicago and anywhere else where appetites are satisfied by politicians. When the government picks winners and losers, who's the loser? Just look in the mirror, hold that thought, and tell me later.

Republicans (http://www.chicagotribune.com/topic/politics/parties-movements/republican-party-ORGOV0000004.topic) are hoping to hang this around Obama's political neck, and they're doing a good job of it now because his approval ratings are low and the jobless numbers are abysmal and the Democrats (http://www.chicagotribune.com/topic/politics/parties-movements/democratic-party-ORGOV0000005.topic) are in full killer-rabbit panic. But there have been Republican national scandals, too, and they're always ridiculously and depressingly similar.

At least in Illinois our scandals are quite ecumenical, with Republicans eager to help Democrats steal whatever they can grab.

In Solyndra, like any proper City Hall political scandal, there are similar archetypes.

There are the guys who count. The guys who bring the cash. They count because they do the counting. They have leverage. They're always there at the fundraisers. And so they're the ones who are allowed to gorge at the public trough.

The bureaucrats are the fulcrum so the guys with the leverage can lift great weight without too much effort. And while they might whine privately among themselves, they don't hold news conferences to blow the whistle.

They keep their mouths shut until the deal is done. If anyone gets caught and the problem becomes public, at least they've got email to cover their behinds. And they're doing a good job covering.

But there's one group that doesn't get their behinds covered.

Instead, their behinds are right out there, suspended foolishly, and waiting to get kicked.

We're the taxpayers — in Illinois we call ourselves chumbolones because we're the ones who stupidly end up covering all the losses. As in the Solyndra mess.

It's the Chicago Way, but instead of a paving or trucking contract, it's a "green" solar panel contract. The company received a $535 million loan.

"The optics of a Solyndra default will be bad," according to a Jan. 31 email from an Office of Management and Budget staffer printed in the Washington Post (http://www.chicagotribune.com/topic/arts-culture/mass-media/newspapers/the-washington-post-ORCRP016752.topic). "If Solyndra defaults down the road, the optics will arguably be worse later than they would be today. … In addition, the timing will likely coincide with the 2012 campaign season heating up."

I love the use of "optics." It's one of those bloodless words finding favor these days.

"Optics" suggests bureaucrats might think in terms of symbolism, political hieroglyphs, in grand vistas, rather than in hard numbers, like the $535,000,000 that went poof.

But it's not their money, is it? It's ours.

So this is not about Washington optics after all. The Solyndra scandal is about the Washington smell of things.

Those of us from Chicago know exactly what it smells like. And It doesn't smell fresh and green.

[osoab]

A little of W's green money movements.

Green-energy plant sucks up subsidies, then goes bust (http://washingtonexaminer.com/politics/2011/02/green-energy-plant-sucks-subsidies-then-goes-bust)


To turn wood chips into ethanol fuel, George W. Bush's Department of Energy in February 2007 announced a $76 million grant to Range Fuels for a cutting-edge refinery. A few months later, the refinery opened in the piney woods of Treutlen County, Ga., as the taxpayers of Georgia piled on another $6 million. In 2008, the ethanol plant was the first beneficiary of the Biorefinery Assistance Program, pocketing a loan for $80 million guaranteed by the U.S. taxpayers. Last month, the refinery closed down, having failed to squeeze even a drop of ethanol out of its pine chips.

The Soperton, Ga., ethanol plant is another blemish on ethanol's already tarnished image, but more broadly, it is cautionary tale about the elusive nature of "green jobs" and the folly of the government's efforts at "investing" -- as President Obama puts it -- in new technologies.

Late in the Bush administration, corn-based ethanol started to get a bad rap. Corn for ethanol was crowding out other crops, and food prices were soaring. Mexicans rioted as tortilla prices spiked. So Bush started talking up "advanced biofuels" including "cellulosic ethanol": roughly, ethanol distilled from plants that were not also food products. Bush mentioned wood chips and switchgrass in two consecutive State of the Union addresses

Georgia politicians saw an opportunity here. "The Saudi Arabia of Pine Trees" became an unofficial state motto among Peach State politicians, and Gov. Sonny Perdue declared, "I'm confident the bioenergy industry and sector is going to be a cornerstone of the new Georgia."

Amid all this hopeful talk by politicians, there were naysayers among the scientists. One Nobel Prize-winning physicist talked to the New York Times about these startups trying to turn logging waste into fuel. "You have to look at starts with a grain of salt, especially starts where they say, 'It's around the corner, and by the way, can you pay half the bill?' "

But that same scientist, Steven Chu, is now the secretary of energy, and his Energy Department has recently offered a loan guarantee of as much as $1 billion to a Texas company looking to squeeze fuel out of wood.

The Texas company, KiOR, isn't trying to produce ethanol and methanol as Range Fuels is doing in Soperton. KiOR's end product would be synthetic crude oil, which can do everything ethanol can do (except spike a punch) and much more. This could be part of why the Soperton plant is having trouble finding new investors: Why turn wood chips into white lightning when you can turn them into black gold?

If KiOR's efforts produce a useful fuel, politicians will take credit. But the fact that it has apparently supplanted subsidized wood-to-ethanol makes you wonder what will supplant wood-to-crude before it ever gets to market.

More to the point, how much private investment capital has been dragged to useless fuels because of the promise of subsidies? Range Fuels alone attracted more than $100 million in private investment. Without subsidies, that money would have gone to projects whose promise was not taxpayer money but market demand -- that is, somewhere useful. Our "green" subsidies could be postponing the day we get an alternative to foreign oil.

Range Fuels is a politically connected, mostly through its founder, venture capitalist Vinod Khosla. Khosla has given more the $350,000 to federal candidates and campaign committees in recent years, a vast majority going to Democrats. In his home state of California, Khosla has famously and openly bankrolled ballot measures to direct state funding to his own "green" ventures or use regulation to make his investments more valuable.

Range Fuels' lobbying budget is small, having spent only about $50,000 over the past three years. Their lobbyists have been former top staffers for powerful Democratic Sens. Patty Murray, Ron Wyden, and Max Baucus.

Despite these Democratic ties, it's been Republicans who have lathered the subsidies on Soperton and celebrated them -- Gov. Perdue, President Bush, Sens. Johnny Isakson and Saxby Chambliss. On the GOP side, Range Fuels' most politically connected asset may be the aptly named Pat Wood. Wood is a revolving-door veteran -- he's the former chairman of the Federal Energy Regulatory Commission, having won that job on the recommendation of then-Enron Chairman Ken Lay.

Just as Enron sucked up subsidies before collapsing, the wood-to-ethanol project in Georgia is yet another dog in Uncle Sam's "investment" portfolio.



So if a stick save can be pulled out of their asses, where is the next .gov subsidy boon going to be? This would be outside of the banks of course.

[osoab]

A Solyndra Insider's Words (http://www.zerohedge.com/contributed/solyndra-insiders-words)



On September 16th I received an email from a Solyndra (“SOL”) employee. This individual was on of the management team at SOL. He is a part of the Silicon Valley world and does not want his name to come out. I have his permission to use his words. As a “Wanna Be” journalist I’m reluctant to introduce information without attributing it to a source. That said, I respect the position of this individual. His words of explanation:

My apologies for not completely identifying myself, but I am not currently in any spotlight w/ regards to visits from men in blue windbreakers with stenciling on the back. My goal is to steer as well clear of that particular issue as I can.... Thanks for your patience in not asking for my identity at this juncture.
On the Importance of the Failed 2009 IPO
Note: S1 is the SEC document for an Initial Public Offering. Fab 1&2 are the company’s manufacturing facilities

The original plan was to have Fab 1 operating on a "almost at profit basis" (a proof of concept + - type level), then use an IPO to fund the next push into economies of scale. Or use strategic partnerships and sovereign relationships to that.

The S-1 had been filed in the Nov Dec 2009 time frame, and I had heard that at the fateful Board meeting that preceded the putsch, that it had been announced that that financial situation of the country and the position of the Solyndra's strategy had led the I-bankers to tell the execs that any IPO would be a failure and they should expect a lead balloon from the market. The I bankers then told the e-team that *if* Fab 2 was finished in time, and brought to good production, *and* the solar prices should at any point start to pull out of the crash, *then* they would recommend the IPO. The "recommend" was their words, but I believe that this is the way of saying that they would in no way do the IPO at that time.


The Fed money was explicitly tied to being *solely* used to build Fab 2. Solyndra could not use the loan proceeds for *anything* else.
This exchange is important. The company plan was to turn FAB#1 into a profit and then expand. The investment bankers said no “No Money” to that plan. It is clear that in late 2009 SOL committed to the strategy of rapidly using the DOE money to build out FAB#2. How much influence did the investment banker’s recommendations have on this fateful decision? It would be interesting to see company files on this topic. Even more interesting would be a review of the DOE files. If we find a memo that reads: “We’re doing it the way the bankers are telling us to” it will prove the point. It’s interesting, in this context, to note that Wall Street does not have to create toxic synthetic securities to cause the taxpayers to suffer a loss. They just have to talk.
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The Role of Goldman Sachs


Goldman was the main underwriter/adviser...... I think they were exclusive in the role of adviser in the DOE deal and in the proposed IPO. They were also very heavily involved in the larger private equity raises.
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On George Kaiser



Argonaut is a funding vehicle for the Kaiser Family Foundation. His *foundation* "channeled money. Further, this is not a case of a corporate shell. The fact is that if Soly had made 20 billion dollars, GK would receive ----- zero. The foundation is a 501(c)(3) non-profit entity, and subject to strict controls by both state and federal law on the purposes that they can engage their assets for. It has a fiduciary responsibility that does not include benefiting GK. For example, everyone knows that there would be a world of difference in classifying an investment from Bill Gates, and one from the Bill and Melinda Gates Foundation. And that is precisely the issue here.
Draw what you will of this exchange. It does put the role of George Kaiser in a different light.
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On SOL and Obama


For Solyndra, it knew from the get go that its existence was predicated on economies of scale. So it had a huge urge to build a *big* plant. Unfortunately the equities had already at that time pumped 600 million or so into it, and HSH Nordbank had committed to a 90 million loan. The 2008 well went dry..... and it needed 800 million to build a plant that would be cost effective (a fair and reasonable price for a good semi fab these days....)
The Obama admin was jonesing for a two-fer: green jobs *and* stimulus. And you now have two people who want the same result (albeit one for political purposes and one for "greed" purposes).
Look, no one pointed a gun at Solyndra and said "apply and take this loan". It needed BIG capital to get the project over the hill. And in 2008-2009, there was only one game in town.
It takes two to tango.
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On the Obama Plant Visit


With a heavy dose of ironic twists, the WH approaches Upper Management telling them that they would be very interested in a trip by the President. Do you tell them "no, our CEO is headed out the door, and we are *not* going to let you showcase the completion of our Fab that *you* helped pay for?"....... The entire Presidential trip was a rush undertaking, I think there was only about 1.5 weeks between the request and the trip.

And then the June cramdown occurs, and Solyndra loses a massive amount of technical talent in the next three months. It is quite a story filled with ironic twists.
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On the Sale of Assets to Argonaut pre-bankruptcy
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Note: On 9/15 I wrote (http://brucekrasting.blogspot.com/2011/09/solyndra-few-new-facts-few-new.html)about a transaction that occurred on July 29, 2011 where Sol sold the inventory and accounts receivables to a new company affiliated with George Kaiser’s family foundation (Argonaut Ventures). This is in response to that article:

You mentioned the following as to the A/R sale on Solyndra:

"This could have been an arms-length transaction that was a last ditch effort to save SOL."

This is exactly the point. Solyndra was on the cusp of closing a second funding deal with Madrone and Argonaut as lead investors. In fact, the funding event in Dec - Jan contemplated such a second funding, as Argonaut and Madrone committed to the present round, but Solyndra had to try and find other entities (not necessarily get them to sign on to the term sheet, but had to try and get new ones in). Nonetheless, as part and parcel of the Dec/Jan/Feb funding event (the one that DOE subordinated to), the leads in that committed to the second round.

The fact that a SPV was set up in regards to a "factor" or towards a greater control of inventory by the investors is no surprise to me. If you read carefully, the Dec/Jan/Feb round had a similar trajectory. In fact, Solyndra Inc. winked out of existence (essentially) in March, as all assets were transferred to a wholly owned subsidiary (Solyndra LLC) as part of the restructure in conjunction with the DJF funding. Solyndra Inc. changed its name to 360 Solar Holdings, and reflected that the original Inc had been transformed into a holding company.
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Was There Any Hanky Panky in the 7/29/11 transaction?




This is transaction that *has* to be approved by the Board, both as materiality and as to a potential self-dealing issue.



If the transaction was done w/o the approval by the Board, then you have a big-time civil case *and* (b/c of the Feds) potential criminal issues. Knowing the people involved, there is no way this is the case.
If it was approved by the Board, then the Board majority had to approve. (if not, see above) There is no way the Board would approve this potential of *handing out* stuff to others w/o something coming back as consideration. Again, there were multiple entities involved in approving this decision. If it was done underhandedly, then a vast civil/criminal conspiracy exists among all the board members, the executive team, and potentially the board observers.
Occam's razor tells me that this is a legit injection operation, that fell apart prior to final closing.
The conclusion is that there were so many eyes and so many lawyers who knew that a worst-case outcome was possible that there was no manipulation. They all knew that this story would come out in the light of day.

Did insiders understand what was happening?


Trouble was brewing a year and a half ago with the first "massive wipeout" equity round, and when Chris Gronet was consigned to a figurehead role in Feb of last year. The co. was run between Feb and June by a triumvirate of Stover (cfo), Gaffney (GC), and (damn i forgot the name of the sales VP who bolted to the roofing company in texas...... was it Kirk Roller?)
Was there a “surprise” collapse at the end? Who walked?


I am very aware that this second funding was being worked on feverishly all the way up until the night before the "mass layoff". In fact, just a week before the deal was described to me as being in the bag, as to *everyone* on all sides of the deal.
So who walked at the last minute? Was it George Kaiser or was it Madrone (Wal-Mart family). We might find out the answer to this one-day. I’m betting it was Madrone.
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Was business that bad?


In April 2011, the all hands meeting showed a big bubble in upcoming expected orders ---- enough that the Company seemed very confident of meeting its internal goal of doubling sales year to year over 2010 (i.e. from 110 million to 220 million).
Note that the figures made known were broken down into actuals, "hard" expectations (i.e. negotiations nearly complete), "soft" expectations (negotiations starting or ongoing), and leads. Each category showed significant increase on a year to year comparison.
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On the wisdom of the DOE accepting subordination of it’s debt.


DOE had a crappy decision in December 2010. The same decision faced by *everyone* who is the primary lender/holder in a cramdown situation.
The decision was: subordinate and give up "veto", or they could have killed the DJF deal and walked away with 5 cents on the dollar in foreclosure. (i.e. the DOE had a right to "take Fab 2 and run it" in that circumstance, but does *anyone* really believe that they could have tempted even a smidgen of the people to "cross over" to Fab 2, especially since the cramdown in May pretty much smoked the talent pool at Solyndra already.....)
By taking the commands of the "last dollar' at the table, they basically said that we will give up that last 5 cents to try and let SOLY get going. And I really do believe that the strides that SOLY took between last May and now were actually quite good. So I wouldn’t say that DOE got outfoxed, they got outmuscled by the "last dollars in the door" (as happens every single time)
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On the changing role of the DOE
Note: In February of 2011 the DOE agreed to provide seniority (preference in BK) to a new loan from existing equity investors. (D,J,F) refers to the recapitalizations that took place in December, January and February.

Prior to DJF funding, the DOE role was one of secured creditor with heavy liens on the major component of Solyndra operations. In fact, the operating agreements that went into the loan went well beyond the "secured creditor." What existed prior to the DJF funding was that DOE would foreclose on Solyndra Fab 2 LLC, which held the operations and assets associated with the new fab. (In fact, this entity went onto be Solyndra LLC after the DJF funding). I do not believe they had much (if any) role in the operation of Solyndra Inc, who then owned Sol Fab 2 LLC as a wholly owned subsidiary (the sub subject to foreclosure upon by the DOE)
Subsequent to the DJF round, DOE subordinated its lien on the main assets of Solyndra: i.e. Fab 2 LLC and all assets under it. DOE won the right to have an observer at all Board meetings (which it ostensibly excercised much to the glee of conservative bloggers..... :) )
Accordingly, I don't see how DOE could agree to the deal, except in the role of an essentially unsecured creditor. I do not know if the rework even gave them that right (ie. the right "agree" to items like this).
So, I do not have that particular knowledge. DOE *must* have known about the deal, but absent any "can stop clause" associated with the rework in DJF, I don't see how they could have actively agreed to anything.
From this I conclude that when the DOE took a back seat on it’s loan, it also took a backseat in its oversight/involvement in the company. Any documentation that would support this conclusion would prove embarrassing to the DOE.
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On Solyndra The DOE and George Bush


The DOE had the Bush loan program going, and Solyndra hopped on that train early and got one of the first "semifinalist" announcements. IIRC, the Bush admin was also really jonesing to get the loan out, so as to feather 43's cap. But that didn’t happen in time.
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On Chris Gronet
Note: Founder, former CEO and Chairman of SOL



Chris really resigned (was fired) in Feb last year. He was around, but did nothing between then and June, since the triumvirate was running the company.
After Harrison came in, Chris "had an office", but was never around. His sole function was as Chairman of the Board.
This is since there were two "wipeout" equity rounds: one in March-ish last year, and then the one in DJF this year.
In each case, investors having more than x shares could participate and maintain their relative % ownership. They set this low, since they were very worried about derivative lawsuits in the future due to the cramdowns, and how the beneficence would accrue to only "insiders" w/o this provision. Chris opted in, thus maintaining his ownership share both through the dilution from #333333; font-family: 'Courier New',Courier,monospace; line-height: 16px;">12xdilution / cramdown,and the subsequent 100x dilution/cramdown.So in *each* round he stayed on as Chairman, actually due to the sheer numbers of shares he opted in for (even though he was still not at all involved in *anything* to do with the day to day operation of the company for over a year and half.)
On 8/19, which was right in the throes of the latest cramdown/equity round, Chris resigned only one position: that of Chairman of the Board. I believe he actually also was no longer even to be on the Board post last putative equity round. So, the announcement was made of his resignation, which appears to be a clear indication that Chris either didn't participate in the last round (or was somehow not included..... which would seem odd given his holdings)
The resignation of Gronet on 8/19 is indicative that his ownership position reqts were outrun by his pocketbook. But to reiterate, Gronet had *no* day to day interaction with Solyndra from last February. His only interaction in that time between last Feb and just currently was in the role as Chairman of the Board.
Note: This discussion confirms that there were numerous calls of capital on the equity investors in 2011. These were met (the dilution numbers). While the amounts of additional equity are not clear, the shellacking for the investors is bigger than previously reported. It also speaks to their intent. The equity was trying to keep Sol alive.
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On the personnel changes at the top

John Gaffney came in as GC in Dec 2009. Gaffney had been GC at First Solar, and had very deep historical ties to the Walton family (Walmart). The Waltons were investors in Solyndra through the Madrone partnership.
Within 3 months there was a massive shakeup in the Exec team. The two mainstays of Solyndra were "put to pasture" in either March or April. Kelly Truman was "reoragnized" from VP of Sales and Marketing to some bullshit corner job, and (at least internally to Solyndra) it was announced that Chris Gronet was assuming the role of the "face of the company". In the same email, it was also announced that day to day operations were going to be done by the troika of Gaffney, Bill Stover, and Kirk Roller. Kirk left Solyndra about a month and a half later.
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This is a Silicon Valley story. No different than the dozens before it. Huge successes and spectacular failures. The only difference is that tax-payer money got involved. That’s probably a good lesson to learn for the folks in the Valley and the big family money that makes it tick. Keep the Feds out of your backyard and we’ll all be better off.
My sincere thanks to this ex Solyndra employee for allowing me to share his thoughts.

[osoab]

Solargate Meets Enron: Solyndra CEO And CFO To Plead The Fifth (http://www.zerohedge.com/news/solargate-meets-enron-solyndra-ceo-and-cfo-plead-fifth)




And now the political rags will really tear the American Jobs Act, ARRA and the administration, apart, because the Venn diagrams of Enron and Watergate just crossed and the point of intersection is called Solyndra. According to Reuters: "Solyndra LLC's chief executive and chief financial officer will invoke their Fifth Amendment rights and decline to answer any questions put to them at a Congressional hearing on Friday, according to letters from their attorneys obtained by Reuters." But, but, what do they have to hide? And how many times in the past has pleading the fifth not led to a prison sentence for someone? And, implicitly, and potentially, the commencement of impeachment hearings?
From Reuters:



In the letters sent to the House Energy and Commerce Committee's Subcommittee on Oversight and Investigations, attorneys for Solyndra CEO Brian Harrison and CFO W. G. Stover said they advised their clients not to provide testimony during the hearings.

The bankrupt company's $535 million federal loan guarantee is being investigated by the House Energy and Commerce Committee.

Harrison is represented by Orrick, Herrington & Sutcliffe and Stover is represented by Keker & Van Nest.

Solyndra's offices were raided by the FBI two days after the company filed for bankruptcy, although the FBI did not say what prompted the raid.