$300 million taxpayer investment in Solyndra sold for … $90.3 million
posted at 3:36 pm on August 24, 2012 by Ed Morrissey
In 2009, the Obama administration approved a set of loan guarantees to Solyndra that totaled over $520 million, which supposedly would have created thousands of new jobs. Most of that money, $300 million, went to build a new manufacturing plant for the solar panels that cost more to build than the market price they could fetch. For some reason, the Department of Energy and the White House found this to be a solid business model. Eventually, the company went bankrupt despite an effort by the Obama administration to bring new cash into Solyndra — by illegally subordinating taxpayer standing in event of a collapse.
The bankruptcy continued to unwind this week with the sale of the new facility. The $300 million facility managed to go for 30 cents on the dollar:
Seagate Technology Plc (STX.O), maker of hard drives and storage devices, has agreed to pay $90.3 million for the former manufacturing plant and headquarters building of bankrupt Solyndra LLC, which was financed by a controversial government loan, according to bankruptcy court documents.
Seagate’s offer will be considered an initial bid, or “stalking horse,” which could be topped by a competing offer of at least $1 million more when an auction is held, according to court documents filed late Wednesday. A hearing to set the terms and date for the auction and declare Seagate’s offer the stalking horse has been set for September 24. …
Solyndra’s Fremont, California, building cost more than $300 million and was completed in 2010, according to prior court documents.
A lot of people lost real-estate equity in the collapse of the housing bubble, even in the commercial real-estate industry. However, those were people who invested before 2008, during irrational and unrealistic property values. How did the DoE approve loans for a new commercial property at $300 million in 2009 for a property that can only sell at a 70% discount in 2012?
Bear in mind, too, that the receivers didn’t just dump this for the first party to show an interest. According to Reuters, Seagate won a bidding war that included companies from the US, China, and Europe. This was the best competitive price for the facility — only 30% of what the Obama administration gave Solyndra to build it in the first place. Perhaps Congress should dig further into the construction process at Solyndra to see why a facility built with $300 million of taxpayer money only had $90 million of value, because at first blush, it looks like a lot of money went elsewhere than the facility.
The best news? Taxpayers probably won’t see a dime of Seagate’s money for the facility. When the Obama administration illegally subordinated taxpayers to newer investors like Obama bundler George Kaiser, taxpayers got put far back in line for repayment from Solyndra’s bankruptcy — far enough back not to get any reimbursement on the half-billion dollars Obama threw at Solyndra. Obama’s current chief of staff Jack Lew played a central part in that decision:
They show that Energy Department officials argued that Solyndra might be able to pull out of its downward spiral if given an emergency infusion of cash.
They also show that career OMB staff members circulated a series of e-mails emphasizing the risks of restructuring the loan. In congressional testimony last year, the agency’s deputy director suggested that career staff members made the final determination about what to do and “used their best expertise.”
The House energy committee is expected to release the results of its 18-month investigation into Solyndra this week. Its report, parts of which were obtained by The Washington Post, suggests that then-OMB Director Jack Lew let the refinancing move forward without intervening, even though some OMB analysts thought a refinancing plan that favored private investors might violate the law. Lew is now White House chief of staff.
There will eventually be more to this story, when fresh eyes get a chance to investigate the malfeasance from top to bottom in the Solyndra scam.
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