The House Energy and Commerce Committee this morning is holding a hearing on Solyndra, the solar panel maker that recently went bankrupt after raising nearly $1 billion in private capital and securing a $535 million loan guarantee from the Department of Energy.
My plan is to live-blog the proceedings, so long as there are actual questions-and-answers (as opposed to endless speech-ifying). It is scheduled to begin shortly. In the meantime, here is the written testimony of Jonathan Silver, a onetime venture capitalist who currently runs DoE’s loan guarantee program.
Be sure to refresh the page in order to get the most current updates. Here we go (most recent update at bottom)…
*** Rep. Cliff Stearns (R-FL) is kicking things off, and seems to have already made up his mind. This not only was an improper loan, but also is an indictment of Obama Administration policy (he rejects Silver’s suggestion that the Solyndra loan can be traced back to the Bush Administration).
*** Stearns notes the FBI raid on Solyndra headquarters and the home of Solyndra’s CEO. But wouldn’t such raids suggest some sort of fraud? And, if so, wouldn’t that mean DoE was misled? Just asking questions…
*** Stearns also is noting emails that make it appear that the White House rushed DoE to make a decision on the loan.
*** Stearns talks about how Solyndra was a money-losing entity. Well, ummm… It was a start-up. Most of them lose money at that stage.
*** Stearns talks cap table, and how private investors are owed the first $75 million to be recouped. To be clear, however, that is $75 million in debt provided to the company after the DoE loan — debt Solyndra was required to raise as part of a DoE loan restructuring designed to stave off bankruptcy. All of the equity shareholders — most of Solyndra’s money — get repaid afrter the government (which likely means they get washed out).
*** Next up is Diana (D-CO). Sounds like she’s going with the “perfect storm” defense — including the massive subsidies that China provides to its solar panel makers.
*** Ok, so we’re basically laying out the partisan positions. Democrats say “Bush and Obama Administrations,” Republicans say “Obama Administration.” It’s enough to make me want to downgrade the entire subcommittee.
*** DeGette says Solyndra execs told her in July that “things were looking better.” She is “perplexed” by the timing.
*** Rep. Fred Upton (R-MI) is now up. Sounds like the exact same speech Stearns made. Can’t they check this ahead of time to avoid redundancy and the subsequent wasting of everyone’s time?
*** DoE has $10 billion more to spend on cleantech grants before the end of September.
*** Now it’s Joe Barton (R-TX), who says he supports loan guarantees for alt energy companies, but not the current process through which they are committed.
*** Sounds like the company execs will testify next week.
*** Back to Bush vs. Obama.
*** Henry Waxman (D-CA) also basically saying Solyndra execs lied to him about the company’s financial position. Here’s an interesting question: What did Solyndra’s VCs tell their limited partners about the company’s situation? Did the LPs get different info than Congress? Or did Solyndra execs lie to its company’s investors (think Canopy Financial)?
*** Waxman: DoE did restructuring — including new $75m in private debt — because it felt immediate liquidation would result in 20 cents on the dollar.
*** Waxman: Majority of committee members deny climate change exists. As such, they have predisposition to opposing investments in alt energies.
*** Opening statements are concluded. Thank goodness.
*** Jonathan Silver is reading his statement. You can read along here.
*** Solar cell prices have fallen 42% in first 8 months of 2011. Combo of subsidized Chinese companies flooding the market, and European econ crisis that has decreased demand.
*** Now testifying is Jeffrey Zients, Deputy Director for Management and Chief Performance Officer. He is the opposite of dynamic.
*** After 42 minutes, we are finally getting to questions. And, predictably, it’s Stearns asking Bush vs. Obama (and cutting off Silver, as if time is now of essence).
*** Wow. Stearns keeps cutting off Silver, and now is making another speech. Why ask questions when you think you know the answers? Circus.
*** Silver can’t get in more than a few words. Stearns asks about due diligence, given the lack of credit committee staff. Silver tries to explain, by saying DoE has thousands of employees — and basically outsources some of the due diligence to scientists, etc. But he can’t get it out before Stearns jumps in again… Wonder what Stearns thinks is an optimal number of people to conduct due diligence.
*** Stearns is done, but not before giving another defense of Bush Administration.
*** DoE keeps sending over info via email. The latest is about China vs. U.S. solar subsidies:
*** Silver gets asked if “cheap labor” is helping the Chinese market, but he says it’s only a minor factor. Also gets asked if, given China’s massive subsidies, if we should just walk away and accept our inability to compete in solar. He thinks we should stay and keep investing, developing, etc.
*** What’s amazing is that there still have not been any specific questions about Solyndra’s financials, expectations, etc?
*** Joe Barton is up, and back to Bush vs. Obama. Seriously.
*** Barton pointing out that the credit committee first opposed loan, then approved it (after change in president). Think he meant “recommends.” Either way, implication is that change was political — rather than due to additional due diligence. Bet Barton would be fascinated to learn that VCs sometimes turn down a Series B round, and participate in a Series C.
*** Waxman is up. Asking Silver to discuss risks inherent in start-up financing, and then moves on to general solar industry trends. Will no one get into the nitty-gritty on Solyndra?
*** And now back to timeline questions. Isn’t this part cut-and-dry? Couldn’t they just put up a chart everyone can refer to. And, for clarity, make pre-2009 items red (for Bush) and post-2009 items blue (for Obama)?
*** Silver: I’ve never spoken to George Kaiser, nor has my staff. Zients says same thing. Both also deny that White House instructed loan to be made, in part due to Kaiser’s contributions to Obama campaign.
*** Michael Burgess (R – TX) is up. Focusing on alleged pressure applied by Administration, based on emails. Zients says that he was not a recipient of any of the emails, but believes emails are about scheduling of loan for accounting purposes — not approval of the loan. Burgess pushes back. Really would prefer to hear from Silver on all of this. Assume that’s coming soon.
*** Burgess to Silver: “Your response as a venture capitalist is likely not consistent with being a good public steward.”
*** Rep. Dingell (D-MI): Tells GOP committee members that if they have evidence of wrongdoing, bring it forward.
*** Silver asked if Solyndra could have survived without the DoE loan? He says it’s difficult to see how. Obvious (but not asked) follow-up: Any idea, therefore, why VCs kept investing? Did they have reason to expect DoE loan? Unfortunately, not a single one of Solyndra’s VC backers has been willing to discuss the situation, either on the record or on background.
*** Rep. Lee Terry (R-NE) up, back to Bush vs. Obama. I’ve run out of synonyms for pathetic. Oh, wait: Piteous.
*** Terry asking Silver if he had direct communications about Solyndra from the White House. He doesn’t directly answer. Zients sayd he did have such communications, including with Office of Energy and Climate Control.
*** Ed Markey (D-MA) is, I think, the final questioner. He begins by suggesting the committee should be looking into loan guarantees made to oil companies. If he doesn’t ask about Solyndra’s finances, it will be an o-fer. Now he’s going back to global solar price collapse, and arguing it wasn’t knowable in 2009 or 2010. Still no specifics about companies not accepting Solyndra’s proposition of big up-front fees for long-term savings.
*** I was wrong. John Sullivan (R-OK) has questions. Asks again about DoE loan office’s HER resources. Also again about pressure, and Zients again says timing acceleration was about closing the loan — not granting the loan.
*** Silver asked about FBI raids. Says he does not know reason for raids. He also says he has no reason to believe DoE was misled about company financials.
*** Rep. Blackburn (R-TN) is obsessed by the existence/absence of a “file” on Solyndra at OMB. Apparently that would be important, although she doesn’t explain why. Zients says he was briefed on history, but doesn’t think he was given a comprehensive file.
*** Pretty sure Rep. Blackburn just repeated Markey’s reference to Carson’s Carnac, but called it Cognac.
*** Back to the “file” issue. Apparently Blackburn represents a district full of filing cabinet makers or something… She concludes by making statements about due diligence failures, not asking questions.
*** Silver says loan guarantee program is not about picking winners and losers. Says it’s about supporting companies that private sector has already selected. Adds that most loans are given to generation, not manufacturing, companies — which means they have PPA deals in place.
*** Rep. Phil Gingrey (R-GA) keeps confusing DoT and DoE. Also alleges refinancing was illegal because it made private investors senior to DoE. Silver says it was approved by general counsel of DoE, OMB, etc. Adds that law requires DoE to be senior at time of loan, not necessarily subsequently.
*** Okay, this has gone on long enough without anything substantive learned. I’m going to stop live-blogging now, but will keep it on in the background. If something else comes up, I’ll note it here. Thanks for reading…
