Solyndra violated loan terms in 2010 but got more federal money, DOE confirms

[alp227]

Source: The Washington Post

The U.S. Department of Energy learned in December that Solyndra was violating its federal loan deal, but the agency changed the loan terms to allow the solar company to continue receiving taxpayer funds, federal officials confirmed Wednesday.

Executives at Solyndra, which had been awarded a $535 million government-backed loan to spur its solar-panel production, confided to the Energy Department late last fall that the Fremont, Calif., company was running out of money and at risk of liquidating.

The company was unable on Dec. 1 to make its first $5 million payment into a special reserve fund, which was required under the loan terms and designed to help protect taxpayers.

Congressional investigators have questioned why the Obama administration agreed to help the company in late 2010 when it was warned that the firm was at risk of collapse. Internal e-mails show federal reviewers initially estimated they could save the taxpayers as much as $168 million by letting the company go under in December 2010, rather than resuscitating it and allowing it to draw down more federal money.

Read more: http://www.washingtonpost.com/politics/solyndra-violated-terms-of-federal-loan-in-late-2010-energy-dept-confirms/2011/09/28/gIQApl8Y5K_story.html

[Ian David]

1. In 2010, wasn't pretty much EVERY company at risk of collapse? n/t

[christx30]

2. +100

and if we had cut them off back then, we might not be out $535 million.

[Ian David]

3. My point was that EVERYONE was in trouble. That doesn't mean you help NO ONE.

Also:

[No Elephants]

4. From what I heard, Solyndr's business model was not capable of anything but insolvency.

[Ian David]

5. I think their business model may have been to sell at a loss until they get enough market share...

... and then to either reduce cost or raise their prices once they were established.

Many businesses operate at a loss when they're starting up. Especially pharmaceutical companies and some dot.coms. They get floated by venture capital from private or government sources.

[No Elephants]

8. Sorry, that does not do it. You have to have more than that to get venture capital

Sell at a loss until we're established alone is not going to get you any private investor and should not get you a full loan guaranty by taxpayers, either.

"Many businesses operate at a loss when they're starting up."

Yes, I know that.

"They get floated by venture capital from private or government sources."

Not really. Not if all they show is a hope of being profitable some day. And venture capitalists get both a lot of stock and control of operations, either as soon as the investment deal closes, or on the happening (or failure to happen) of some event.

This was a loan guaranty of an untested entity in the amount of half a billion based on a wishful thinking business plan. This is not SOP.

[christx30]

6. My point is that

how does one decide to help this company? It just doesn't work on it's face. And if you decide to help this company with $535 million, doesn't that take money away from other things? Like arming Mexican drug cartels? And that's a program that I know we can all get behind.

[Psephos]

7. That's a great graph.

Seriously, it says it all.

However, the issue with Solyndra isn't the lost money, per se, but the amateur-hour analytics and the smell of corruption in the award process. The athletic damage-control going on says this has TPTB freakin'.