The story will come back to the front pages on 9/14. That is the date that has been set for the House Energy and Commerce hearing that will look into S and the DOE connection. It can be safely assumed that some tough questions will be asked, I think they will be adroitly ducked. The cast of characters:
Of interest to me is that there are no witnesses scheduled for the principal owner, Argonaut Ventures (George Kaiser family investment vehicle). One would think that it might be informative to talk with the investors. Ah, well.
.
The DIP document (BK loan) has been filed with the court. No surprises. Argonaut will provide the dough. This is a $4mm loan. The terms are very clear. This money is only available to facilitate a very rapid 363 sale. (Standard BK process).
If the Judge says, “Yes” to the DIP (he has to have a reason why not to) S will go up for sale. It won’t take long once the process starts.
This raises the question of, “What’s S worth?” I admit that I don’t have a clue.
Inventory and accounts receivable were sold in July (To, guess who? Argonaut of course!). The company has facilities in two locations. They have a product, but they haven’t figured out how to make money at it. That can’t be worth a hell of a lot.
The one asset they might have is a Net Operating Loss. A big one at that; at least $500mm. This is tricky stuff. NOLs are subject to IRS rules (#382-Look it up if you want to get dizzy), so I asked a BK Attorney who has been assisting me for some color:
Using post bk NOLs to shelter profits from existing businesses is one of those things that is hard to pin down an answer to. Technically, you aren't supposed to be able to - IRS frowns on it. But good attorneys make 1000 an hour for a reason.
Zell has spoken quite openly about targeting bankrupt companies only for their NOLs, to shelter profits from solid companies already in his stable. There has to be a defensible continuity of business, but solar is energy, so there would be continuity in pairing it with an existing energy firm. BUT - to take advantage of 382, the sale in bk would have to be structured very carefully - so the thing to watch for is the deal being set up that way. You don't get the NOLs if you buy the assets -you only get a chance to keep them if you buy the company, and meet the pre and post ownership thresholds.
Bottom line. Only Argonaut has a chance of utilizing the tax benefits. Whether they are ultimately worth anything is not clear. But this fact does give Argonaut a potential leg up on other bidders. Keep in mind that Argonaut would not be paying cash for anything. They would just swap all of S (including the NOLs) for their otherwise worthless IOUs.
On a personal note, my connection to this got me on Tulsa Ok. radio station KFAQ the other day. Tulsa is also the home of George Kaiser. The host, Pat Campbell, said that he had reason to believe that Kaiser’s “people” would listen in. At one point it came up that Kaiser is a pillar of Tulsa. I used that chance to say: (Edited for stutters, run ons etc…(Link)
George Kaiser could step up in a bankruptcy court and offer to put $300mm into S. The proceeds would be used to substantially pay down the government IOU. The balance of the debt would be converted into common stock. If S were around in 5-7 years, the government might get the rest of its money back.
That's my challenge to George Kaiser. Step up and fix this problem.
Of course this would be the dumbest thing for Kaiser to do. I don’t think he’s dumb at all (and he has the best lawyers). I’m sure he doesn’t like losing good money after bad. That said, this isn’t one of those everyday stories. This one could swing an election. I wonder if he gave it a thought.
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Solyndra was covered on the CBS Evening News tonight questioning possible sweetheart ties to the administration but predictably no mention of the senior bondholder structure putting the Gov behind the CEO in seniority. They dutifully report 4 visits by the CEO leading up to the contract, but never mention if any subsequent meetings were ever held afterwards. Isn't this an obvious smoking gun? Prior to receipt of the money it is necessary to make a visit as often as possible. However, once the money is in hand, once the deal is done, who cares? Certainly not Solyndra, not the Administration and especially anyone who calls themselves a reporter. What a laugh, reporter, more like stenographer for hire.
Thankfully Bruce, you already exposed all of this or I would have missed a big piece of the picture.
This is how the capitalists of destruction see things. Only they can turn a NOL into something of value, which is really just another example of privatizing profits and socializing losses. Kaiser will come out ahead on this thing, trust me.
This is a huge deal because it's the kind of thing Obama is insisting we move to for our energy needs rather than coal, oil, nuclear and natural gas. This was the MODEL of Obama's new energy policy and now it's bust. Additionally, it is turning out that the White House knew it was going to go bust but decided to push ahead with it anyway - typical of everything this administration touches. And finally, it's a huge story because three days before Solyndra went belly up, Steven Chu, Secretary of Energy gave another solar company called Genesis even more money than this one.
My bet is that Solyndra was a sham from start to finish.
Get some government $$$, give Obummer something to crow about, then take losses and get some huge write-off's.
I wish I understood what the hell this is about and why it matters. People and Businesses are going down every week.
Why is this so special?
An Obama-authorized half billion dollar subsidy to a GREEN INDUSTRY startup? There's stone to grind every axe anyone could ever want in this story.
you left out the project was run by an Obama money bundler
who had opaque ownership through a series of trusts
I tried to answer your question but posted it wrong - my response is above. :)
A friend of mine has a friend who was high in the feeding chain there. He tells me that everyone in management was consumed with political infighting, I guess to maximize their annual bonuses, being their share of the half billion. Performance didn't matter, it was all about trashing everyone else. Marketing plan (and I suppose business plan) was "our product is junk, maybe the market will get big enough that there is room for us to sell something".
It rings true, given my experience of Silicon Valley. Far more people concerned with skimming off their share than there are focussed on producing a solid product. Bullshit trumps performance every time. The tech world is full of them.
Not much hope for us until we start getting some strange fruit dangling high on the lamposts. This is a society in the terminal stages of decadence, as far as I can see.
Same story as the late '90s DotCom bubble, but back then, the business plan was just to steal from the VCs until you could go public and rip off the stock investors.
The best comparison would likely be to all the for-profit colleges and universities that would sign up any illiterate fool who could mark an X for the government-guaranteed education loan money. Everyone in the organization knows that it's failing at the putative goals, but it's a paycheck and that's the only real reason they're there in the first place.
I was reading something and forgot to switch over to Freedom Watch. Fox was on in the background and O'Reilly had John Stossel on talking about Solyndra. Now that Stossel's segment is over it's time to change the channel as I can't stand O'Reilly. Hopefully, O'Reilly's viewers will listen to Stossel, though, about the free market.
O'Reilly's viewers may be able to listen to Stossel, but they are incapable of comprehending him.
True dat.
Keep hammerin Bruce...thars gold in dim dar hills.
Barry is trapped in a Keynesian Twilight Zone...
http://www.youtube.com/watch?v=XLJTYWKALzE
Edit: "Energy Secretary Steven Chu said today that his department had finalized a $1.2-billion loan guarantee to Mojave Solar for the development of the Mojave Solar Project. When complete, the 250-megawatt solar generation project in San Bernardino County will increase the nation’s currently installed concentrating solar power capacity by approximately 50%."
What could possibly go wrong?
http://latimesblogs.latimes.com/money_co/2011/09/energy-department-presses-ahead-with-solar-investments.html
Good God, is this on top of the $850 million Chu handed to the Genesis project or company or whatever it was - only three days before Solyndra crashed?
Seems so.
Also, looks like something called BrightSource Energy (IPO'd in April @ 250 million...lol) has lined up another 1.6 billion from the DOE for the same project.
"The commitment announced Monday is part of the financing that BrightSource Energy needs to build a solar power plant in California's Mojave Desert. BrightSource also has lined up $1.6 billion in loans guaranteed by the U.S. Department of Energy and a $300 million investment from NRG Energy Inc."
http://www.huffingtonpost.com/2011/04/11/google-solar-project-goog_n_847830.html
I'm going long glass cleaner for all these solar panels in a dusty desert...ROTFL!!!
What you said.
- Ned
[ed. and plus:
Ya, and ya gotta' hand it to GE's (... well, GE "Bank Holding Company's) excellent understanding of the IRS's "rules."
--Rule of Man vs. Rule of Law. ]
Uh, oh...
Looks like the paper trail leads right to the front door of the White House:
http://abcnews.go.com/Blotter/emails-obama-white-house-monitored-huge-loan-connected/story?id=14508865
If I were the White House, i'd take this scandal over the ATF gunrunning scandal which also leads tot the front door of the White House. At least they won't go to jail for this one, they'll only look like a bunch of jackasses.
Is there any doubt this was an orchestrated effort to defraud? You have the OMB and other Govt agencies screaming foul throughout the entire process.You have a sweatheart loan at rates that no other company obtained. You had a major Obama donor getting 535 million dollars no questions asked with a failed business plan. It cost the company $6 to produce a product that foreign companies manufacture for $1.25 that sells for $3 a unit. One employee whistleblower stated he personally witnessed over $100,000 of product wasted and disposed of daily. You have Administration and Govt Agency members attending S meetings for at least 6 months. You have Kaiser visiting the WH no less than 20 times.
Then you have the FBI raiding and cleansing any files and evidence before Congress can subpeona evidence.
THe questions that need to be asked are what does Obama know and when did he know it.
"It cost the company $6 to produce a product that foreign companies manufacture for $1.25 that sells for $3 a unit."
I was at a solar expo last month where some chinese manufacturer was selling $1/Watt modules. Compare that to Solyndra's $6/W effort. How did the DoE even think that this could fly?
You had a major Obama donor getting 535 million dollars no questions asked with a failed business plan...
Too bad we can't have our 535 lawmakers each pony up a million dollars out of their pocket to pay for this fiasco.
Oh wait, that's where the money went.
Why? You can't prosecute Presidents in this country.
The FEDS rolled in last week on what was probably a search-and-scrub operation. Now, most of the evidence is surely either 'lost' or uber 'Top Secret' because it would likely implode what's left of the community organizer's presidency.
http://www.bloomberg.com/news/2011-09-08/solyndra-s-california-headquart...
All the paperwork has been sealed into a large wooden crate and left in a huge, dusty warehouse...
Right next to the Ark of the Covenant.
http://www.foxnews.com/politics/2011/09/13/gop-to-hold-hearing-on-now-ba...
Funny......no mention of Kaiser, or the restructuring of who gets paid first in bankruptcy
Bruce: Are you aware that you are now on the "no-fly" list?
Good work Bruce!
Both federal and state laws permit the court to void and/or reverse asset sales shortly before filing a bankruptcy petition. Should the court determine that assets were transferred to circumvent or avoid the bankruptcy process, criminal penalties may even apply.
Another unwelcome penalty takes the form of a court dismissal of the bankruptcy petition. This can be the most damaging outcome of all, as all the protection of filing bankruptcy (no collection activity, ability to discharge all debts) disappears and one's financial difficulties will resume and, possibly, multiply.
http://www.suite101.com/content/selling-assets-before-bankruptcy-a200543the problem here is the transfer of assets IN bankruptcy
relief of debt from this government loan is taxable income. the entity probably has some R&D and other tax attribute assets. those would be more valuable than NOLs, which should be pretty close to wiped out.
as in prior posts, i still think the devil here is in prior operating statements. i hope the commission brings up conveyances to officers, conveyances to shareholders / creditors subordinate to the Treasury, and any insider related vendor relationships. they should also ask for a break out of trips to the white house and any other extravagant political expendures buried in marketing, advertising or somewhere else. the use of reserve / defect to artifically convey assets should also be addressed- based on the comments above.
central economic planning always fails, undoubtedly it had viability issues. but, this case also looks, smells & acts like a fleecing.
Nope, he certainly did not give it any thought whatsoever, and he won't.
But you're a good guy for calling him out.
He's more likely to be giving thought to donating to the Perry campaign.
I wonder how many readers realize that you are a brave man Bruce. I certainly appreciate it and hope others do also.
Write him directly and say "thanks" for his insight, I'm sure he'll give you the courtesy of a response, he did to mine.
Judge Napolitano has been talking about Solyndra on FBN.
Most of the people in the news media like to view Government as the shining knight on a white horse which will save everyone from the evils of Greed and Capitalism. Any story which contradicts this view gets ignored or backpaged.
I would say keep working on this story. And perhaps it might be worthwhile to more closely at George Kaiser and also at other questionable Obama investments. Usually when you find one rat, it means that there are many more close by.
Very good Big Ben. Green.
THANK YOU Bruce for your work in bringing this crap-pile into the light.
Dude:
The story dropped because the FBI cleansed the site and the executive's homes. The NSA scrubbed the digital records, so "There's nothing to see here - move along."
..surely AG Holder would never allow such a thing.
" The illegal we do right away. The unconstitutional takes a little longer."
Henry Kissinger
This thing smells so bad anyone with any bk and biz sense would know there is a rat.
The US Govt offered a loan guarantee. Not even a loan. They had no upside in this deal, yet they are supposed to take subordination to equity positions that had unlimited upside? This is nuts. No one would take this deal unless they were retarded (in which case they should not be representing US interests) or corrupt.
Either someone at the DOE needs get the guillotine and apologize to bending over the entire US, or Obama needs to rat out Kaiser, or simply admit that he is a ho and will pimp out all Americans if that is what it takes.
Whose gotcha covered Goldie?
Obama's pimp hand is strong! Reco'nize!
Meh, I'd say he talks like a fag, and his shit's all retarded. That's ok though, because lots of 'tards lead kick-ass lives.
Obama's peeps will be quietly steering this steaming pile of ashes into the electoral memory hole so fast it will make your head spin.
The GOP has their own operatives, but this is a gentleman's game. They'll let the water pass under the bridge because they've got plenty of their own shit they don't want stirred.
Couple back-room deals, maybe a tragic hottub accident or two, and it's gone.
Got some second hand info from a reliable source that Solyndra was chucking around 30% of the solar panels they produced because of "defects".
Yeah, right.
Something tells me they couldn't compete with China in production of panels.
Last thing they wanted was a huge stockpile of panels sitting around unsold while they were going broke, so the defects excuse was being used.
Their product is actually tubes, and they're (from account of another in the industry) horridly less efficient than other current media. It appears it was more scam than anything else.
My co-worker is always reporting sightings of "Green Jobs". I thought I saw one once, but it was a sasquatch. We figured the Solyndra plant in Fremont was a giant box being held up by a stick made of tightly wrapped money, under which tree hugging platitudes were scattered to attract juvenile Green Jobs whereupon the stick would be pulled and the Green Jobs captured and nurtured to fruition by bottle feeding them a concentrated solution of finely ground US currency and cow dung...
Hysterical! Someday we're going to look back at this period and label 'green jobs' in the same category as 'tulip bulb currency'.
"Green job" = "labor intensive small farmer"
+1