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NEW YORK (
TheStreet) -- Nobody wants to buy failed solar company
Solyndra, and its fate will now rest in the hands of
corporate auctioneers looking to sell it
piece by piece.
"No company has given us a bid that we can work with. In the context of bankruptcy, by law a bid must be higher than the estimated liquidation value," said Eric Carlson, financial adviser at Imperial Capital, which was hired once Solyndra entered bankruptcy to find a buyer willing to revive the company as a solar manufacturer.
Carlson said Imperial Capital contacted at least 150 potential buyers, but was not able to find one bidder willing to bid above estimated liquidation value. The closer Solyndra gets to the scrap heap, the more questionable the market rationale provided by the federal government for its continued investment in the company looks.
At the height of the resulting political furor, the Department of Energy presented a very specific defense of its continued investment in a company with a deteriorating financial outlook, a defense predicated on
Solyndra being worth more as a going concern
than in liquidation.
The former head of the DOE loan guarantee program, Jonathan Silver, said this in written testimony provided ahead of a grilling by a House Energy committee:
"[The] DOE faced a choice: whether to (1) refuse to allow the [Solyndra's] restructuring, thereby ensuring that Solyndra would close its doors immediately, and that the U.S. taxpayer would recover only a modest amount of the loan; or (2) allow the company to accept the emergency financing, thereby giving it and its almost 1,000 workers a fighting chance at success, and the government a higher expected recovery on its loan."
Silver continued, "The decision was not an easy one, and it was made only after significant analysis and deliberation, using the same sort of tools and rigor that private sector lenders use in such scenarios...Both the market study and the financial modeling suggested that the company's value as a going concern was greater than what the government was likely to recover in liquidation at that time. Accordingly, DOE determined that restructuring the loan guarantee gave the U.S. taxpayer the best chance of being repaid on the loan."