World's Largest Solar Plant, With Second Largest Ever Department of Energy Loan Guarantee, Files For Bankruptcyby Tyler Durden, ZeroHedge
Apr. 02, 2012
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Solyndra was just the appetizer. Earlier today, in what will come as a surprise only to members of the administration, the company which proudly held the rights to the world's largest solar power project, the hilariously named Solar Trust of America ("STA"), filed for bankruptcy. And while one could say that the company's epic collapse is more a function of alternative energy politics in Germany, where its 70% parent Solar Millennium AG filed for bankruptcy last December, what is relevant is that last April STA was the proud recipient of a $2.1 billion conditional loan from the Department of Energy, incidentally the second largest loan ever handed out by the DOE's Stephen Chu. That amount was supposed to fund the expansion of the company's 1000 MW Blythe Solar Power Project in Riverside, California. From the funding press release, "This project construction is expected to create over 1,000 direct jobs in Southern California, 7,500 indirect jobs in related industries throughout the United States, and more than 200 long-term operational jobs at the facility itself. It will play a key role in stimulating the American economy," said Uwe T. Schmidt, Chairman and CEO of Solar Trust of America and Executive Chairman of project development subsidiary Solar Millennium, LLC." Instead, what Solar Trust will do is create lots of billable hours for bankruptcy attorneys (at $1,000/hour), and a good old equity extraction for the $22 million DIP lender, which just happens to be NextEra Energy Resources, LLC, another "alternative energy" company which last year received a $935 million loan courtesy of the very same (and now $2.1 billion poorer) Department of Energy, which is also a subsidiary of public NextEra Energy (NEE), in the process ultimately resulting in yet another transfer of taxpayer cash to NEE's private shareholders.
As Bloomberg notes: "The company joins Energy Conversion Devices Inc., a U.S. solar manufacturer that suspended production last year; LSP Energy LP, the owner of a natural-gas-fired power plant in Mississippi; Ener1 Inc., maker of lithium-ion batteries for plug-in electric cars; solar-panel maker Solyndra LLC; and energy storage company Beacon Power Corp. (BCONQ) in bankruptcy."
And so central planning fails again, and again, and again, and again. But it sure will be better with the centrally planned monetary (and in the absence of a working Congress - also fiscal) policy. Because this time it really will be different.
Solar Trust of America and several affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. It estimated to have as much as $10 million of assets, and between $50 million and $100 million of liabilities.At least someone's reputation will be tarnished as a result of this latest epic failure of the Obama administration to misallocate capital :
Solar Millennium said it has been sued by former Chief Executive Utz Claassen over public statements by company representatives that he claims have damaged his reputation and left him unable to find a job. Solar Millennium said the lawsuit would not directly affect its insolvency proceedings.Two people, however, who won't be humiliated at all are California Governor Jerry Brown, and Secretary of the Interior Ken Salazar, who reprise the role of Joe Biden, last seen praising not only MF Global's Jon Corzine, but that other epic administration failure: Solyndra. Watch them praise the groundbreaking for the Blythe facility.
Epic embarrassment. And not even a full year ago.
But before that, of course, we had the funding of the plant with a $2.1 billion loan guarantee from the US Department of Energy, the second largest ever, smaller only than Georgia Power's $8.33 billion loan guarantee.
From the DOE:
U.S. Energy Secretary Steven Chu today announced the offer of a conditional commitment for a $2.1 billion loan guarantee to support Units 1 and 2 of the Blythe Solar Power Project, sponsored by Solar Trust of America, LLC. The concentrating solar thermal power plant includes two units comprising a combined 484 megawatt (MW) generating capacity, an eight-mile transmission line and associated infrastructure. The project will be built adjacent to the City of Blythe in Riverside County, California and is expected to create over 1,000 construction jobs and approximately 80 operations jobs. The plant is estimated to avoid over 710,000 tons of carbon dioxide emissions annually, equivalent to the annual greenhouse gas emissions from over 123,000 vehicles.And while we do not know just how much the government will have to pay out of pocket, we do know that STA had at least $50 million in debt at filing.
What we do know for sure is that at least the firm's financial advisors made money on the deal. From the company's Investors page:
World-Class Financial AdvisorsGreat job there Citi and Deutsche: can you please advise us how much in taxpayer cash you received as part of your incalculable "advice" please?
Also, as noted earlier on, as part of its first day filings, the company was prompt announce the procurement of DIP funding (link), which will come in the form of a $22.3 million secured loan (against what assets?) at Libor + 800bps, courtesy of NextEra Energy Resource, LLC. The same NextEra featured in the following press release:
NextEra Energy Resources' subsidiary closes on $935 million financing and secures a DOE loan guarantee for its Genesis solar projectThat's right: one ward of the state, bailing out another ward of the state, all to reduce those evil carobn emissions. Although that is not all. NextEra is also a subsidiary of the publicly traded, albeit with very private investors, NextEra Energy (NEE). Which means that every dollar extracted out of Solar Trust via the DIP, and ultimately via a Credit Bid in which NextEra will acquire the STA assets at pennies on the dollar, will go straight to NEE's shareholders. Who are these shareholders you ask? Here they are: spot the odd one(s) out.
And that is how in crony America taxpayer money goes from one insolvent pocket, to another, to Wall Street, all under the guise of idealistic pursuits and clean energy.
There is more to this story but we will stop here as we have had enough.
For those interest here is the first day affidavit, as well as the DIP term sheet. And the last time we saw an Org Chart this fun, the company's name started with En and ended in ron.