Yup. Solyndra’s going BK. Taking with it US government loans to the tune of $10 for every taxpaying household in the country and $500K or so for every job it created for one year.
But seriously, raise your hand if you DIDN’T see this coming. Like, OK, those with their hand’s raised, you are no longer allowed to comment on this blog. This deal’s been close to a running joke among the cleantech cynics for a couple of years now.
We wrote about this before. The theory on the product was that rooftop install issues and low wind resistance were so important that they should be coating CIGS on a circle and encapsulating it in the most weird and costly way possible (or maybe because they liked the cattle-grate aesthetic), and then demanding a premium price for it. Keep in mind, it was roughly the same amount of CIGS material they would have used if they had done a similiar size flat plate module.
Um, only their PR people and the original inventor must have ever really believed that product design was a good idea to sink a billion and change dollars into (the “and change” part by itself being well larger than the average venture fund OR the average venture backed exit).
Open question, does this go down as the largest venture capital bust in history? Like a billion in equity? Certainly bigger than Webvan.
List of venture firms that look like they came close to or exceeded the typical contractual or house investment concentration limits in this deal for at least one of their funds, and/or had to cross-over investments in later funds to keep up.
- Virgin Green Fund
List of hedge funds/family offices that provided most of the cash to cram down those VCs in the last few of rounds including anchoring the equity for the DOE Loan Guarantee and replacing the the $300 mm IPO with $250 mm private equity deal along the way.
- Argonaut (George Kaiser family)
- Madrone (Walton family)
List of those government entities dumb enough to fund a half a billion dollar senior secured loan that went up in smoke within what, a year? Going poof that fast is usually the lender’s mistake, not the borrower’s.
- DOE – AKA the guys who created jobs at the price of like $500K per job created – for like 12 months?
My guess as to actual recoveries for the DOE:
It’s specialty equipment in a commodity business and they let the entire manufacturing staff go. Nobody’s restarting this thing.
- So you’re looking at tops very low 7 figures for the patents, maybe, I haven’t done a review to see whether there is anything of interest outside of their own product defense.
- The c. $216 mm (as of Jan 2010) in equipment gets sold off for tops 5-10 cents on the dollar for other uses, parts, or scrap. And I think I recall they owned one of their chunks of land and building right? The S-1 has land in it as $32 mm, plus building construction in process.
- And a few million in inventory and A/R gets recovered at 5-10 cents and 20-30 cents on the dollar.
- Then, do they have a saleable customer pipeline or development pipeline of contracts that could be sold, or do all those simply evaporate? Probably the latter, but some possibility here.
- MAYBE the government gets back 10-20 cents on the dollar tops, assuming that building and land sell off well. Everyone else? Nada.
Part of me wants to say I told you so, and part of me is literally cringing from the fallout this could have on the cleantech investment sector and a lot of smart, dedicated people I know who were involved in this company. My one nagging fear is that this is just the first of many other multi-hundred of million dollar cleantech venture deals are in the pipeline to go straight to zero.