Burning Millions for failed Solar Company

 

How did a failing California solar company, buffeted by short sellers and shareholder lawsuits, receive a $1.2 billion federal loan guarantee for a photovoltaic electricity ranch project—three weeks after it announced it was building new manufacturing plant in Mexicali, Mexico, to build the panels for the project.

 

The company, SunPower (SPWR-NASDAQ), now carries $820 million in debt, an amount $20 million greater than its market capitalization.  If SunPower was a bank, the feds would shut it down.  Instead, it received a lifeline twice the size of the money sent down the Solyndra drain.

 

Two men with insight into the process are SunPower rooter Rep. George R. Miller III, (D.-Calif.), the senior Democrat on the House Education and Workforce Committee and the co-chairman of the Democratic Steering and Policy Committee, and his SunPower lobbyist son, George Miller IV.

 

Miller the Elder is a strong advocate for SunPower, which converted an old Richmond, Calif., Ford plant in his district to a panel-manufacturing facility.

 

The congressman hosted an Oct. 14, 2010, tour of the plant with company CEO Thomas H. Werner and Interior Secretary Kenneth L. Salazar to promote the company’s fortunes.

 

“The path to a clean energy economy starts here, in places like SunPower’s research and development facility,” said Salazar during the tour.

 

“The work that comes from these facilities transforms renewable energy ideas into a reality.  When renewable energy companies continue to invest in places like California, the realization of a new energy future is within our reach,” he said.

 

Miller the Elder said he was grateful for Salazar's interest.

 

“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 East Bay,” he said.

 

“By fostering a business climate that encourages companies like SunPower, even more good jobs will be created locally, we’ll reduce demand for dirty energy sources, and we’ll cut customers’ utility bills.  That’s the right direction,” he said.

 

SunPower’s political action committee (PAC) was not shy about participating in the political process either.

 

According to the SunPower PAC filings for its activities in the 2010 midterm election campaign cycle, it donated more than $36,000.  Of the $15,650 donated to House and Senate candidates, $14,650 went to Democrats, with these top recipients: $4,000 to Sen. Harry Reid (D.-Nev.), $3,000 to Rep. Gabrielle Gifford (D.-Ariz.) and $2,900 Sen. Barbara Boxer (D.-Calif.).

 

The congressman was not forgotten either.  The SunPower PAC remembered him with $500 for his 2010 campaign.  While SunPower was a financial partner in the congressman’s reelection campaign, it straight-out hired his son.

The loan guarantee is earmarked for the job numbers for the California Valley Solar Ranch (CVSR) in San Luis Obispo County, which it has already sold to NRG Solar, but will continue to maintain.

 

According to the Department of Energy (DOE) website, the CVSR project will create 350 construction jobs during the two-year build and 15 permanent jobs—presumably those are the squeegee men for keeping the panels clean.

If $80 million per permanent job seems a little high, even for the current Obama administration, you are correct.  In addition to the 350 construction jobs and the 15 squeegee men, there will an as-yet-undetermined number of jobs created building the panels for the CVSR—in Mexicali, Mexico.

 

In addition to all its other challenges, the company and its officers are defendants in a federal shareholder lawsuit, whose plaintiffs include, the Austin ( Texas) Police Retirement System, the Arkansas Teachers Retirement System and a number of institutional investors for an alleged scheme to deceive the investing public by making false statements contrary to nonpublic information known to the insiders.

 

The allegations cover the period between April 17, 2008, to Nov. 16, 2009, the day the company announced that it had discovered unsubstantiated accounting entries to its operations in the Philippines, which led to the significant restating of the company's financials.

 

There are a number of lawsuits filed in California courts relating to the same period alleging gross mismanagement, breach of fiduciary responsibility, unjust enrichment and abuse of control.

 

The first of the lawsuits was filed Nov. 18, 2009, and they have yet to be resolved.

 

It is a fair question to ask how a company with such serious charges lodged against its management team could receive a $1.2 billion loan guarantee from the taxpayers, so it could built a new manufacturing plant in Mexico to build the solar panels it will install at a photovoltaic ranch that will create a total of 15 permanent jobs.