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Posts Tagged ‘Solyndra’

Article from SFGate.

Two weeks ago, solar power plant company BrightSource Energy abruptly canceled plans for an initial public stock offering, convinced that investors currently have little appetite for new solar shares.

Now SolarCity Corp. will test that theory.

SolarCity on Monday reported plans for its own IPO. The San Mateo company, best known for leasing rooftop solar systems to homeowners and businesses, filed a confidential draft registration statement with the U.S. Securities and Exchange Commission last week.

SolarCity’s brief statement announcing its IPO did not specify a price range for the stock or say when trading might commence.

The company was founded in 2006 by brothers Lyndon and Peter Rive. Their cousin – Tesla Motors CEO Elon Musk – chairs the company’s board.

SolarCity had been widely expected to go public this year. The popularity of residential solar leases, which allow homeowners to install solar panels without paying the up-front cost, has grown quickly. SolarCity and San Francisco’s SunRun Inc. have emerged as the field’s dominant players.

Ugly year for stocks

But SolarCity could face headwinds on Wall Street.

Solar stocks have endured an ugly year, falling even before the highly public bankruptcy of Fremont’s Solyndra. All have been hammered by a worldwide plunge in solar cell prices, the result of new factories in China flooding the market. A Bloomberg index of major solar stocks – including First Solar Inc. and SunPower Corp. – lost 67 percent of its value in the last 12 months.

So burned have investors been that they may look askance at solar companies that have nothing to do with making cells.

BrightSource, based in Oakland, called off its IPO on April 11, just hours before trading was scheduled to start. The company’s large solar power plants don’t use photovoltaic cells. Instead, they use fields of mirrors to concentrate sunlight and generate heat.

And yet, as BrightSource executives spoke with potential investors in the weeks before the planned IPO, the investors were skittish. It didn’t help that solar stocks, which had shown some improvement in January and February, tanked during the road show, said BrightSource CEO John Woolard.

“The feedback we were getting from investors was, ‘In the solar space in particular, it’s been a bad place for us to be, recently,’ ” Woolard said last week.

He felt fortunate that BrightSource didn’t absolutely need to move forward with its stock sale. The company’s board unanimously voted to cancel the IPO rather than postpone it.

“You can always get a deal done,” Woolard said. “The questions are: at what price? Is there after-market support? Is it going to be a good outcome or not? Is it a deal you want?”

The fall in solar cell prices that has gutted so many solar stocks has, in fact, helped SolarCity.

Although they receive less public attention than struggling solar manufacturers, the companies that develop or install photovoltaic solar systems have benefited from tumbling prices, which make their systems more affordable. That could work in SolarCity’s favor when the company’s shares start trading.

Deal with military

“It’s not a good time for solar manufacturing, but it’s a great time for other parts of the solar industry,” said Ron Pernick, managing director of the Clean Edge Inc. market research firm. “This is one of the areas where we’re seeing a lot of deployment and growth, and it’s quite robust.”

Some large, institutional investors are already quite familiar with SolarCity.

Both Bank of America Merrill Lynch and U.S. Bankcorp. are financing a $1 billion SolarCity project to place solar panels on military housing across the country. The U.S. Department of Energy had initially agreed to back the effort with a loan guarantee of $275 million, under the same federal program that gave Solyndra $528 million to build a factory in Fremont. But the loan program expired before the department and SolarCity could agree on terms.

Those banks understand SolarCity’s business and know that the company doesn’t share the problems plaguing manufacturers, Pernick said.

“I think savvy investors will understand the difference,” he said. “Whether the general public does, we’ll have to see.”

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Article from SFGate.

“Solyndra CEO Brian Harrison, who refused to answer questions from Congress about his solar startup’s high-profile bankruptcy, has left the company, according to a new court filing.

Harrison stepped down on Friday, Solyndra reported in a bankruptcy court document filed late Tuesday. The company said Harrison left “as scheduled,” but didn’t elaborate. A Solyndra spokesman could not be reached for an explanation.

To replace Harrison, Solyndra wants to hire R. Todd Neilson, who served as bankruptcy trustee for boxer Mike Tyson and rap impresario Marion “Suge” Knight. Neilson has a background in forensic accounting, including a stint with the FBI as a special agent on white-collar crime cases.

If approved by the court, Neilson would serve as Solyndra’s chief restructuring officer, shepherding the company through the Chapter 11 process. Solyndra would also hire Neilson’s company – Berkeley Research Group, based in Emeryville – to help restructure or liquidate the company.

Neilson did not return a call seeking comment Wednesday.

Harrison led Solyndra for little more than a year, joining the Fremont company in July 2010. At that point, Solyndra was struggling.

In 2009, the company won a federal loan guarantee worth up to $535 million to build a factory for its tube-shaped solar modules. But by the time Harrison arrived, replacing founder Chris Gronet, the company had canceled plans for an initial public stock offering. Auditors questioned Solyndra’s chances for long-term survival.

Harrison, a former Intel executive, was unable to stop the company’s slide, as low-priced solar panels pouring into the market from China undercut Solyndra’s sales.

The company finally filed for bankruptcy on Sept. 6 of this year, igniting a political firestorm. FBI agents interviewed Harrison two days later, as part of an investigation into the accuracy of Solyndra’s financial statements.

Harrison and the company’s chief financial officer agreed to appear before a congressional subcommittee investigating Solyndra’s loans. But acting on the advice of their attorneys, both men refused to answer the subcommittee’s questions.

In July, Harrison had told members of the same panel that the company’s finances were on firm footing.

It’s not unusual for a company to switch CEOs during Chapter 11 proceedings, bankruptcy experts say. Often, companies bring in reorganization specialists who understand the bankruptcy process far better than the people they replace.

“It does help to have familiarity with the process,” said John Hansen, a partner in the Nossaman LLP law firm. “I’ve seen a lot of regular business people who’ve been in Chapter 11, and they’ve been very frustrated. It’s very restrictive, and they can’t always do what they want to do, the way they want to do it.”

In addition, involvement in a government investigation can interfere with an executive’s ability to do the job.

“When a CEO gets into a position where the company may be facing criminal prosecution or a criminal investigation, the likelihood of the CEO leaving gets pretty high,” said Eric Talley, co-director of the UC Berkeley Center for Law, Business and the Economy.

Like all corporate bankruptcies, Solyndra’s will be complex. In a separate set of bankruptcy court filings on Wednesday, a German company that designed equipment for Solyndra accused its former client of stealing its intellectual property.

Von Ardenne claims that it supplied Solyndra with machinery to deposit solar-cell materials on glass tubes, only to see the Fremont company build its own versions based on Von Ardenne’s designs.”

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Here is an article from SF Gate.

“The U.S. Department of Energy on Monday awarded $92 million in stimulus funds for research projects that could change the way the country uses and stores energy, with $22 million going to California companies and universities.

The money represents the Obama administration’s latest round of investments in green technology. The 2009 American Recovery and Reinvestment Act has already funded loans for several green Bay Area companies, such as Solyndra of Fremont and Tesla Motors of Palo Alto.

“By driving energy innovation, we can take the lead in high-tech energy manufacturing and export these products to the world,” said Energy Secretary Steven Chu.

Eleven projects in California received funding on Monday. Many focus on more energy-efficient cooling systems or better ways to store energy on a large scale – one of the clean tech industry’s holy grails.

Although most of the awards went to Southern California companies and labs, two Bay Area projects received funding. Lawrence Berkeley National Laboratory in Berkeley – which Chu used to run – won $1.6 million to develop flow batteries, a type of rechargeable battery in which reactive chemicals are pumped through the battery’s cells whenever energy is needed. And Primus Power of Alameda won $2 million to develop electrodes for flow batteries.”

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Here is an interesting article on Cleantech/ Greentech IPO´s from Earth2Tech.

“Electric car maker Tesla Motors officially delivered the biggest venture backed IPO of the quarter, raising $226 million, according to numbers out this week from the National Venture Capital Association and Thomson Reuters. What made the public debut different from some of the other venture-backed IPOs that happened this quarter? Well, among a variety of things, last summer Tesla managed to score a coveted $465 million in loans from the Department of Energy.

The link with Uncle Sam likely helped allay investors fears over supporting a risky company that has yet to make a profit and doesn’t plan on making any profits for the next two years. Tesla isn’t the only greentech IPO hopeful backed by the government. In fact, a large number of the greentech companies that have been gunning for the public market, or have recently gone public, have significant government support.

Take lithium ion battery maker A123Systems. The venture-backed company raised $371 million in its public debut in 2009, which was the largest IPO of the year, and represented about a third of the overall IPO market that year in terms of dollars raised. A123 secured a sizable $249 million grant from the Department of Energy last summer.

Before Tesla, the venture-backed greentech IPO hopeful of the hour was solar panel maker Solyndra, which hosted a speech by President Obama in May. Last year the company won a whopping $535 million loan guarantee from the U.S. Department of Energy, and that loan guarantee translated into a loan from the U.S. Treasury. However, despite the government support, investors’ appetites for solar, and Solyndra’s, IPO just wasn’t there and Solyndra ended up ditching its IPO plans last month, in lieu of raising funding from its current investors.

This week, shortly after Tesla’s IPO, an investor behind another venture-backed and government-supported electric car maker suggested it will also one day go public. That would be Fisker Automotive, and Ray Lane, the Kleiner Perkins venture capitalist and former Oracle executive, said this week that “Certainly we would plan to sell shares in the public market once the Karma is on the road and we have visibility into the revenue plan.” In April Fisker closed a $528.7 million loan agreement that will be used to help the startup launch its luxury plug-in hybrid model and set up manufacturing in Delaware for a line of lower-cost plug-in hybrids.

Smart grid company Silver Spring Networks, which has been planning an IPO for the last six months, might not have direct government support, but the close to $4 billion in funds for smart grid projects from the U.S. stimulus package has been a major boon to its utility customers. The Silver Spring folks told me in an email last year that the funding “will go a long way toward accelerating and broadening deployment of the critical smart grid infrastructure.” Silver Spring is working with stimulus award winners Florida Power & Light, Oklahoma Gas and Electric, Sacramento Municipal Utility District, PHI Holdings (including PEPCO, Atlantic City and PEPCO DC) and Modesto Irrigation District.

Other rumored greentech IPO hopefuls (here’s Earth2Tech’s 10 Greentech IPO Picks) that have some sort of government support include solar thermal developer BrightSource Energy and Smith Electric Vehicles. BrightSource received a commitment earlier this year from the Department of Energy for a $1.37 billion loan guarantee to build out BrightSource’s Ivanpah solar project, which is set to be the first new solar thermal power plant built in California’s deserts in 20 years. Smith Electric Vehicles won a $10 million DOE battery grant last summer, and added $22 million under the same program in March.

Of course, not all of the greentech IPO candidates are under the wing of the U.S. government. Biofuel developer Amyris is planning a $100 million IPO without direct government support. But the odds are if you see a greentech startup hit the Nasdaq it’s got Uncle Sam in its corner.

The reality says a couple things about the greentech industry and the IPO market in general. First the IPO market for venture-backed startups is actually relatively weak right now. A significant amount of companies have actually pulled their IPOs in recent weeks and that extra bit of confidence via government support can help push these plans onto the public markets (Solyndra as the exception).

Another issue is that many of the government loans, grants and loan guarantees given to these greentech startups come attached with a cost-sharing requirement over a certain time frame. To unlock the full extent of the government funding companies like Tesla and Solyndra have to raise their own matching funding, by a certain date, and many are turning to the public markets for that.”

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Here is a article from the VC blog at WSJ.

“At The Wall Street Journal’s ECO:nomics conference in March, famed venture capitalist John Doerr declared the clean-technology industry needs a “Netscape moment” – an IPO listing that will capture the public’s imagination and usher in a slew of other companies through an open gate to the public markets.

Several clean-tech investors were looking to solar company Solyndra Inc. as perhaps such a breakthrough. But the fact that Solyndra – which exceeded $100 million last year and has been selling panels briskly – couldn’t pull of an IPO, raises the question of what comes next.

The maker of thin-film solar panels, the first renewable-energy recipient of federal loan guarantees, cited “adverse market conditions” for its decision to pull the IPO. The move will make expansion more difficult for Solyndra, which will require hundreds of millions of dollars in capital to reach its goals.

Rather than persuade public-market investors to buy in, Solyndra opted to once again turn to its private backers for more cash, selling $175 million in secured convertible promissory notes to undisclosed existing investors. The company has already raised $970 million in equity from these backers, the second highest total ever among venture-backed companies.

A tepid IPO market is some reason to blame for Solyndra’s withdrawal. Public investors haven’t exactly embraced unprofitable, risky plays like Solyndra this year, no matter how promising. While Solyndra is selling its product and expanding, mounting losses and an auditor’s going concern statement in its IPO filing didn’t make anything easier for the Fremont, Calif.-based company.

Public investors may also be skeptical whether Solyndra can match up with publicly traded First Solar Inc., which also sells thin-film solar panels and is considered a trail blazer for the industry by many venture capitalists.

“First Solar is preventing the tech [solar] companies from going public,” said Stephen Chin, analyst with UBS AG. “None of these start-up companies like Solyndra, Nanosolar, have scale or large capacity. I think that’s the biggest hindrance. First Solar is hard to compete against,” he added. UBS owned more than 1% of First Solar shares as of end of May, according to a disclosure statement.

Indeed, Solyndra’s manufacturing costs are high at $4 per watt for the fourth fiscal quarter ended Jan. 2, 2010. First Solar, on the other hand, plans to have costs of 78 cents per watt by the end of this year. Solyndra appears to be selling at a loss, too, as its average selling price for the full year ended Jan. 2 was $3.29 per watt, down from $3.75 per watt a year earlier.

“If the more you sell, the more money you lose,” you can’t make that work, said Kevin Landis, portfolio manager for Firsthand funds, which have a stake in another solar CIGS company SoloPower Inc.

First Solar plans to have annual production capacity of about 2 gigawatts at the end of next year, compared to 300 MW promised by Solyndra. Its panels use copper indium gallium diselenide, or CIGS, as the semiconducting material, which has higher potential efficiencies than First Solar’s cadmium telluride.”

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Here is some possitive news on Cleantech.

“The Cleantech Group this morning announced first quarter statistics, and the buzzword expression of the press conference was “bounce back.”

As in: “Following the decline in cleantech investments from 2008 to 2009, the industry has bounced back in the first quarter of 2010,” said Sheeraz Haji, president of Cleantech Group.

You can check out a press release here.

Among the key talking points from the press conference are:

-Q1 saw a record total of 180 deals, which raised $1.9 billion.

-Cleantech venture investment was up 29% from the previous quarter and up 83% from the same period in 2009.

-Government funding and VC dollars do not go hand-in-hand. Of the top 10 deals, only one had received government support. Haji said that although government-related financing is critical, this trend shows that private capital is not at all dependent on government stimulus.

-IPO window is open, Haji said, with seven companies on the IPO launching pad, including Tesla and Solyndra.”

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Here is some interresting thoughts from CNET.

“With investors getting smarter and start-ups getting bought, the mood is brightening in green tech. But the high-profile companies seeking to go public this year have some industry watchers talking bubbles.

For proof, investors point to the spate of planned initial public offerings, including electric car maker Tesla Motors, solar company Solyndra, and biofuels maker Codexis. Smart-grid company Silver Spring Networks and biofuels maker Amyris are rumored to be on deck.

Long-term trends may favor innovative green companies, as concerns about energy resources and the environment grow. But that doesn’t mean this year’s leading companies can navigate the complex regulatory and financial environment to become successful companies, said Jack Robinson, founder of Winslow Management, which focuses on environmentally oriented public companies.

“Valuations seem to be ahead of themselves,” Robinson said. “Some of the people [in venture-backed green-tech companies] don’t have the history and don’t understand the pitfalls that need to be addressed from a technology, market, regulatory, and political point of view.”

An example of a company he considers highly valued is lithium ion battery maker A123 Systems, which went public last September. In addition to raising $371 million, it raised the hopes of many other young energy companies.

Investor Rob Day of Black Coral Capital did an analysis of four recent IPO filings in the green-tech area and was concerned when he found that their unofficial revenue numbers were far below the amount of money put into them.

Nonetheless, even early misfires don’t mean investors should write off the whole sector. The high-profile companies that have filed to go public aren’t the best indicators of what’s to come as many other companies could raise funding through private equity sources, rather than tapping the public stock market, Day argued.

“My worry is that if these IPOs are perceived later on this year as having been unsuccessful, it’ll once again set back the entire clean tech venture industry, because of the example it sets in terms of lack of (financial) exits,” he wrote.

Netscape moment ahead?
Even with the worries over financial returns for investors, there’s a reason that IPO hopefuls have gotten as far as they have. It’s widely recognized that Tesla Motors and Solyndra, for example, have developed innovative technologies. Tesla’s $109,000 Roadster has become a darling among the well-heeled and its planned Model S sedan, priced at about $57,000 before tax credits, has legions of fans even though it won’t be built for two more years.

Solyndra has developed a solar collector designed specifically for flat commercial rooftops. In its first installations, the company touts how quickly these collectors, which use curved thin-film solar cells, can be installed, which brings down the overall system cost.

As with many green-tech upstarts, though, both companies have big-time challenges. Solyndra and Tesla borrowed hundreds of millions of dollars from the U.S. Department of Energy to build manufacturing facilities and they face powerful competition, in the form of incumbent automakers and low-cost Chinese solar panel producers.”

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