Solyndra Office Raided By FBI (1 Viewer)

dapperdan

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Solyndra Headquarters Raided by FBI
Solyndra LLC, the bankrupt solar- panel maker is being raided by the Federal Bureau of Investigation today, an agency spokeswoman said.
http://www.bloomberg.com/news/2011-...rs-raided-by-fbi-agency-spokeswoman-says.html

Yesterday, this blogpiece hit ZH:
I wrote about the solar panel manufacturer Solyndra last week; "Government Investment Disaster in the Works" I highlighted all of the negatives that the company was facing.

It was pretty clear to me that that company was facing trouble. But I had no idea that they would file Chapter 11 the very next day. (Sometimes you just get lucky)

I also made note of some scuttlebutt that George Kaiser (Oklahoma oil billionaire) was involved with Solyndra. I have been looking for a confirmation of this. Kaiser is an important link in this story. He is also a very big fund-raiser for Obama. He is often referred to as a “Bundler”. In this case that means he encouraged/pushed others to put up money for the big O’s campaign.

The Tulsa World filed a story Re the Kaiser connection earlier today. (What better place to get the news than a home town paper). Quotes from the TW article:

The bankruptcy filing indicates that Argonaut Ventures, an investment arm of the Tulsa-based foundation, holds almost 39 percent of Solyndra's parent, 360 Solar Degree Holdings Inc.

Okay, so who is behind Argonaut Ventures?

In an emailed statement to the Tulsa World, a representative of the George Kaiser Family Foundation said the organization made the investment through Argonaut.

So the family foundation was the source of the money that got Solyndra going. But George Kaiser tried to distance himself from this very ugly story. A quote from a Kaiser “spokesperson”:

"George Kaiser is not an investor in Solyndra and did not participate in any discussions with the U.S. government regarding the loan".

Interesting that Kaiser is doing his level best to distance himself from the stink. But it does not work for me:

George Kaiser is chairman of BOK Financial Corp. and owner of Kaiser-Francis Oil Co. Argonaut is headed by Steve Mitchell, who also served on Solyndra's board of directors.

So Kaiser wants us to believe that the Family Foundation he runs invested some $300mm of the families “excess cash” and he did not really know about it. The guy who is running the family’s investments (Steve Mitchell) is also sitting on the board at Solyndra. And we are supposed to believe that George Kaiser was just a passive investor? Not a chance.

We have Mr. Kaiser on the record on this. Again, his words:

“George Kaiser did not participate in any discussions with the U.S. government regarding the loan".

He never spoke to Obama about this? Not even once? Not even when Obama went (twice) to the company’s manufacturing offices in Pa and CA? I don’t believe that denial.

There is one very slippery fact that I am wondering about. It has to do with subordination. This a legal issue on who gets paid first in a bankruptcy. In all cases the equity is last on the list. But that is not the situation with Solyndra/Kaiser. From Bloomberg:

In February, Solyndra and its lenders reorganized the company’s debts, putting the U.S. loan behind $69.3 million owed to other lenders, including an affiliate of Solyndra’s biggest shareholder, Argonaut Ventures.

This kind of stuff is not supposed to happen. The equity interest of the Kaiser family got a preference as to the right of repayment from Solyndra. Kaiser got in front of the line. He got in front of the US Government’s $528mm IOU from Solyndra. Kaiser got in front of the interests of the American taxpayer. There had to be some very serious arm-twisting going on in the background to achieve this feat.
http://www.zerohedge.com/contributed/solyndra-obama-connection
 
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dapperdan

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If this Solyndra bankruptcy is the only major failure, I'd have to guess that as a political issue, it will fade from public consciousness, not a huge deal (politically) imo. But if there is a second (or third) major failure similar to Solyndra, it's going to become much easier for the "Crony Capitalism" and "Corruption" charges to stick.
 

JimEverett

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When he says:
"There is one very slippery fact that I am wondering about. It has to do with subordination. This a legal issue on who gets paid first in a bankruptcy. In all cases the equity is last on the list. But that is not the situation with Solyndra/Kaiser. From Bloomberg:

In February, Solyndra and its lenders reorganized the company’s debts, putting the U.S. loan behind $69.3 million owed to other lenders, including an affiliate of Solyndra’s biggest shareholder, Argonaut Ventures. "

He is not being truthful. Here is the real story:

The Obama administration let $385 million in taxpayer support for Solyndra Inc. take a back seat to funds from new investors in an unsuccessful effort to keep the solar-panel manufacturer operating.

The Energy Department decided the January refinancing represented the “highest probable net benefit” for the government, according to a government document obtained by Bloomberg News. Investors provided the company $75 million that became senior debt, ahead of all but $150 million of the federal government’s stake.

http://www.bloomberg.com/news/2011-...s-investors-under-obama-refinancing-deal.html

Such events are fairly common.
 
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dapperdan

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Such events are fairly common.
How common?

I'm sure there are examples, but it doesn't seem very common to me that a senior bondholder voluntarily takes a step back. It's contrary to the rationale of being a senior bondholder in the first place, as a bondholder you want first dibbs at the asset carcass. Why give that up?
 

bobad

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This development is not surprising at all.

The stimulus money giveaway is custom made for corruption and crony capitalism. I'm guessing even honest people find it hard to turn down. We must make it illegal for money to change hands. It gives the Feds too much power and too many opportunities for corruption
 

JimEverett

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How common?

I'm sure there are examples, but it doesn't seem very common to me that a senior bondholder voluntarily takes a step back. It's contrary to the rationale of being a senior bondholder in the first place, as a bondholder you want first dibbs at the asset carcass. Why give that up?
Technically the government is not a bondholder, right? I mean it owns debt, but its really a lienholder. And it is far from a rare event that a lienholder might subordinate their lien on the promise of some cash infusion. One reason may be that the lienholder believes the proposed cash is enough for the company to turn it around, or maybe it feels like the chance is it worth it since if the liquidation happened without the infusion the lienholder would get pennioes on the dollar. I am sure there are a whole host of other reasons it might happen - tax reasons being a big one.
 

ArmoredNOSaint

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Well, this isn't good:

White House pushed for financial review of solar company now under investigation

The Obama White House tried to rush federal reviewers for a decision on a nearly half-billion-dollar loan to the solar-panel manufacturer Solyndra so Vice President Biden could announce the approval at a September 2009 groundbreaking for the company’s factory, newly obtained e-mails show.

The Silicon Valley company, a centerpiece in President Obama’s initiative to develop clean energy technologies, had been tentatively approved for the loan by the Energy Department but was awaiting a final financial review by the Office of Management and Budget.

The August 2009 e-mails, released exclusively to The Washington Post, show White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan and noting a looming press event at which they planned to announce the deal. In response, OMB officials expressed concern that they were being rushed to approve the company’s project without adequate time to assess the risk to taxpayers, according to information provided by Republican congressional investigators.

Solyndra collapsed two weeks ago, leaving taxpayers liable for the $535 million loan.

One e-mail from an OMB official referred to “the time pressure we are under to sign-off on Solyndra.” Another complained, “There isn’t time to negotiate.”

“We have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week),” one official wrote. That Aug. 31, 2009, message, written by a senior OMB staffer and sent to Terrell P. McSweeny, Biden’s domestic policy adviser, concluded, “We would prefer to have sufficient time to do our due diligence reviews.”

White House officials said Tuesday that no one in the administration tried to influence the OMB decision on the loan. They stressed that the e-mails show only that the administration had a “quite active interest” in the timing of OMB’s decision.

“There was interest in when a decision would be made because of its impact on whether an event involving the vice president could be scheduled for a particular date or not, but the loan guarantee decision was merit-based and made by career staffers at DOE,” White House spokesman Eric Schultz said.
So, according to the emails, the White House rushed the approval of a loan to a now-defunct solar company without taking the time to assess any loss to taxpayers. When you add this to the other fiascos of this administration, don't you think it's time to stop giving these guys the benefit of the doubt?
 

BIG E

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Well, this isn't good:

White House pushed for financial review of solar company now under investigation



So, according to the emails, the White House rushed the approval of a loan to a now-defunct solar company without taking the time to assess any loss to taxpayers. When you add this to the other fiascos of this administration, don't you think it's time to stop giving these guys the benefit of the doubt?
It's alright that the government will lose a 1/2 billion dollars as long as Obama was able to get some publicity out of it.
You need to get your priorities straight.:ezbill:
 

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House Republican investigators have unearthed emails -- reviewed by NBC -- which reveal repeated warnings by government staffers about the loan. Days before final approval there was a warning that one model showed the project would run out of cash in September 2011, which it did.
Another memo from the White House Office of Management and Budget, also cited by The Washington Post, questioned the model the government was using, but said "[g]iven the time pressure we are under to sign-off on Solyndra, we don't have time to change the model."
Bottom Line - White House ignored red flags in loan to failed solar company
 
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dapperdan

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Bruce Krasting: More on Solyndra
More on Solyndra – The next move
In any Chapter 11 filing the senior lenders have preference. This means that if there are any liquidation proceeds Senior Creditors get their money back first...

In the case of Solyndra, the senior lender is also the largest equity owner, Argonaut Ventures, an investment vehicle controlled by George Kaiser. Argonaut got the preferential position when it agreed to make a $75mm term loan to Solyndra back in February of 2011.

In the layer cake of creditors the highest tier is the DIP (Debtor in Possession). This loan is only granted after a chapter filing. It is approved by the court and as a result stands first in line. The DIP lender has significant sway in the timing and the manner of assets sales. Not surprisingly, the proposed provider of the DIP is Argonaut. (The deal calls for a 15% rate and an $80,000 front end fee. Not bad for a four-week loan)

This means that Argonaut is in control two ways, the senior loan and the DIP...
A bankruptcy attorney who is knowledgeable about the Solyndra case has contacted me. I thought I’d share his thoughts with you. His words describe the situation much better than I:

Two things that jump out at me from the Affidavit - the Tranche A lenders (Argonaut) are offering to be the DIP lender. The terms contained in the DIP agreement usually are the vehicle by which assets are stolen via seemingly innocuous terms that when taken as a whole, serve to control the bk process.

The secured lender will seek to bid for the assets via a credit bid, where they don't have to put new money on the table - their existing secured loan becomes their bid.

The second item that pops out is the dual track marketing - where they will market Solyndra as a whole and as pieces. The affidavit talks about a 4 week marketing runway - that's crazy short even for a podunk company with 1/10th the size. No one can do Due Diligence in 4 weeks. It leaves the DIP lender in a great spot.

The company will claim they don't have the cash to survive a longer marketing runway, and then they will throw their hands up 4 weeks later and say that the horrible deal on the table is the best and only option (and usually for good measure they throw in that it will preserve jobs, they always throw that in) - and at that point the ****** contrived deal is the only option.

Judge bangs his gavel down and the deal is done, and all legit, sanctioned by the bk process itself - everyone was given an opportunity to object in court, provided you can afford 700 dollar an hour bk attys.
 
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dapperdan

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House Republican investigators have unearthed emails -- reviewed by NBC -- which reveal repeated warnings by government staffers about the loan. Days before final approval there was a warning that one model showed the project would run out of cash in September 2011, which it did.
Another memo from the White House Office of Management and Budget, also cited by The Washington Post, questioned the model the government was using, but said "[g]iven the time pressure we are under to sign-off on Solyndra, we don't have time to change the model."
Bottom Line - White House ignored red flags in loan to failed solar company
And in response to the congressional hearing that is going on today...

Solyndra executives back out of congressional hearing
Executives of beleaguered solar equipment maker Solyndra Inc. canceled their Wednesday appearance before a congressional investigative committee at the last minute, citing the demands of a complicated bankruptcy and a federal investigation they face.
Solyndra executives back out of congressional hearing - latimes.com
 

BIG E

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Meanwhile, Republican lawmakers suggested that the February refinancing of the loan providing for private investors to be paid back before the government may be illegal. But that's far from certain, according to Greene.
In the short term, the controversy has spurred calls to roll back or regulate Obama's green jobs program. Sen. David Vitter (R-La.) floated legislation Wednesday to require all renewable energy companies that received a loan from the U.S. government in the past two years to undergo an audit, the Hill reported.
What
 
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dapperdan

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Technically the government is not a bondholder, right? I mean it owns debt, but its really a lienholder. And it is far from a rare event that a lienholder might subordinate their lien on the promise of some cash infusion. One reason may be that the lienholder believes the proposed cash is enough for the company to turn it around, or maybe it feels like the chance is it worth it since if the liquidation happened without the infusion the lienholder would get pennioes on the dollar. I am sure there are a whole host of other reasons it might happen - tax reasons being a big one.
So, I'd ask again...how common? I would say that it's rare for a lienholder to give up a coveted position in a potential bankruptcy. You have argued that the events are "fairly common". On the belief that these events (voluntarily giving up top lienholder position) are "fairly common" we simply disagree.

Obviously, the "review" that was done by DOE giving up that lienholder position was flat-out incompetent.

Frankly, I'm less interested in "a whole host of reasons" as I am for the specific reasons as to how this decision was made by DOE. The information we're getting from DOE is long on generalities and short on specifics. What we're seeing from Solyndra is executives skipping out on Congressional hearings at the last minute. Not good.

Ultimately, the "It could be this", "it could be that" line of discussion is going to give way to specific details.

I guess we'll simply have to be patient and see where it leads.
 

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how many jobs has this green job initiative created?

Sounds like a boondoggle to me.
 
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dapperdan

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how many jobs has this green job initiative created?

Sounds like a boondoggle to me.
I wish that I had saved the link, maybe I'll take the time to find it again...but I was reading a report a couple of days ago that makes the most sense to me, reconciling what seems to be two disparate facts: 1) Jobs Created or Saved by the Stimulus, that is listed as an accomplishment by the Administration, and 2) the fact that there has been no net new job growth (actually slightly negative) since the stimulus was passed.

What the author demonstrated was the many of the "Jobs Created or Saved" have actually been jobs that have been transferred, so we get a substitution effect.
 

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