Solar Firm That Received $1.2 Billion Federal Loan Plagued by Financial Problems
By Stephen Clark
Published October 12, 2011
| FoxNews.com
With the Solyndra scandal still swirling, the Obama administration is under pressure to reveal the financial condition of the solar companies that received $4.75 billion in similar federal loan guarantees on the last day of the program.
Republican lawmakers on two House committees are seeking details about the loans given to First Solar, SunPower Corp. and ProLogis. Of those three companies, troubling financial revelations have emerged about SunPower, which received a $1.2 billion loan, more than twice the money approved for Solyndra, which filed for bankruptcy last month after receiving a $528 million loan.
The Energy Department says on its website that the $1.2 billion loan to help build the California Valley Solar Ranch in San Luis Obispo County, a project that will help create 15 permanent jobs, which adds up to the equivalent of $80 million in taxpayer money for each job.
But the Energy Department stands by the project.
“This project underwent many months of rigorous technical, financial and legal due diligence by career employees in the DOE loan program,” Energy spokesman Damien LaVera said in a statement to FoxNews.com. “It was approved for one reason only: because it meets all the requirements of the program – helping America win the clean energy race and create entire new industries for American workers.”
In April, the Energy Department gave SunPower a conditional loan guarantee, even though the company was receiving financing in the capital markets. Shortly after the conditional guarantee, French energy giant Total bought a majority ownership in SunPower and extended a $1 billion credit line to the company.
But SunPower posted $150 million in losses during the first half of this year and its debt is nearly 80 percent higher than the market value of all its outstanding shares. The company is also facing class action lawsuits for misstating its earnings.SunPower sold the solar ranch that received the federal loan to NRG, an energy company based in New Jersey. But SunPower is still developing the project and stands to profit if it succeeds.
The Energy Department told FoxNews.com that the ranch was sold to NRG “as a means for increasing equity in the project.”
“DOE was aware of that arrangement, which was outlined in the term sheet negotiated before the conditional commitment was signed,” the official said.
The company is also politically connected. Rep. George Miller's son is SunPower's top lobbyist. The elder Miller, a powerful California Democrat, toured the plant last October with Interior Secretary Ken Salazar, and reportedly said, "We've worked hard to make renewable energy a priority because it represents America's future economic growth. Today, businesses like SunPower are moving forward, hiring 200 people for good clean energy jobs in the Easy Bay."
It’s not clear what role, if any, either of them played in securing the loan. Miller’s office did not respond to a request for comment.
An Energy Department official denied crony capitalism was a factor in the loan guarantee.
“The notion that political connections played any role in this application is simply false,” the official said. “This application was approved based on the exhaustive due diligence of the career professionals in the loan program, and nothing else.”
Rep. Darrell Issa, chairman of the House Oversight and Government Reform Committee, sent a letter to Energy Secretary Steven Chu last week seeking information on the three companies.
“The committee is committed to protecting taxpayers from further loses from ill-fated ‘investments’ in companies whose viability is far from certain,” he wrote.
Issa told “Fox News Sunday” that the Solyndra debacle isn’t an isolated event.
“We’re finding it’s not just Solyndra. It’s a pattern of these sorts of investments,” he said. “One of the questions we have for Secretary Chu is, tell us why that last day, somehow, you had everything you needed and you didn’t have it over a period of time before?”
An oversight committee aide told FoxNews.com that the Energy Department has yet to respond.
The Energy and Commerce Committee also sent a letter to Chu last week after the Energy secretary didn’t respond to its first letter Sept. 20 requesting documents on the financial condition of the companies receiving loan guarantees.
The committee noted in its letter that President Obama defended the program last week, saying the overall portfolio “is doing well.”
“We sincerely hope that this is true and that no further taxpayer dollars are at risk,” the committee wrote. “However, as Solyndra executives and numerous members of the administration repeatedly told us the same thing about Solyndra during the last seven months, we have a responsibility to inquire further.”
A committee aide told FoxNews.com that the committee is still awaiting a response.
Read more:
http://www.foxnews.com/politics/2011/10/12/solar-firm-that-received-12-billion-federal-loan-plagued-by-financial-problems-702546811/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+foxnews%2Fpolitics+%28Internal+-+Politics+-+Text%29#ixzz1acT6doLHGreek tragedy, scene 2.
If a venture is a worthwhile endeavor, private capital will pour into it. Government injecting capital where it deems fit is a recipe for disaster. No more tax increases to blow on junk like this. CUT SPENDING.
