The dark cloud of Solyndra might have lifted a bit, but, yes, it’s still here — it’s an election year, the $535 million in loan guarantee funds were sizable and high profile and deep investigations can take awhile to produce. Solyndra’s Chief Restructuring Officer, Todd Neilson, an outside bankruptcy expert and former FBI agent, has just completed and published a 204-page report on what-the-heck happened with Solyndra.
Fortune has a detailed analysis of the report (and thanks for embedding the report as well!). I read both the report and the analysis and here’s the key takeways you should know:
DOE had enough info: The report finds that the DOE had enough information to know the risks associated with the loan guarantee for Solyndra. Basically Solyndra wasn’t hiding risks from the DOE.
Loan funds were spent as they were agreed upon: The report says that the funds that Solyndra spent were spent in accordance to the loan documents agreed upon.
Solyndra bonuses weren’t that unusual: There have been some media reports pointing out bonuses that Solyndra execs got in the final weeks that stand in stark contrast to the massive lay off of works. The report found that the metrics used to pay cash bonuses to Solyndra execs were within “materially acceptable limits.”
Solyndra asked the DOE for more than it would give: Solyndra originally asked for loan funds to build all of Fab 2, but it was deemed to large for the DOE, so Solyndra split the funding of Fab 2 into two phases, and the DOE funds went to the first phase. Solyndra also did a hard negotiation for a 20 percent equity contribution to the loan funds, and the DOE wanted much higher — they finally agreed upon a 27 percent equity contribution (Solyndra had to raise this equity funding to match the loan funds). Solyndra also asked the DOE initially if it could have a 10 year term on the guarantee instead of the 7 year term, and Solyndra did not receive this. Solyndra was so frustrated by the delays in the loan award process that it drafted its own term sheet in August 2008 which it sent to the DOE.
Early sales and projects from Solyndra didn’t match, even early on: When Solyndra initially submitted its application for the DOE loan guarantee in 2006 it gave certain projections for sales and costs. But the report found that while sales for Solyndra’s panels did increase between 2008 and 2009, sales growth during that time was only half of the amount projected originally in 2006 and manufacturing and operating costs were almost twice those originally projected in 2006.
Behind the scenes of the Argonaut negotiation: In August 2011, when it was clear Solyndra needed a lot more money, and fast, Argonaut presented a proposal to Solyndra and the DOE, whereby Argonaut would underwrite more funding for Solyndra, if Solyndra’s balance sheet could be restructured to write off significant portions of Tranche B debt, all of Tranche D debt, and all of Tranche E debt. The DOE said no and counter proposed an agreement that kept its debt in place. Argonaut said no to that. Then the DOE decided it would attempt to obtain the approvals necessary to move forward with a transaction based on Argonaut’s original proposal. However, at that point, the report says Argonaut lost internal support at its firm to move forward with the original plan and said instead it needed an additional new investor involved. The was the end and on August 31 Solyndra stopped operations and laid off workers.
Left out of report: There’s no look into the whole George Kaiser issue or the White House’s involvement.