Obama Administration Put the Venture Capitalists First in Line Ahead of American Taxpayers in Upcoming Bankruptcy Proceedings, in Violation of the Law
WASHINGTON, DC – Energy and Commerce Committee Chairman Fred Upton (R-MI) and every member of the Subcommittee on Oversight and Investigations are seeking answers from the venture capitalists behind Solyndra. In the letters to Argonaut Private Equity and Madrone Capital Partners, Members are seeking all materials related to now-bankrupt Solyndra’s $535 million loan guarantee, the company’s cancelled initial public offering, the $75 million credit facility, the February 2011 loan restructuring, the company’s bankruptcy, as well as materials related to communications with the Obama administration. The Committee members are greatly concerned that, despite concerns over the company’s financial viability, the Obama administration still restructured Solyndra’s loan in February 2011, putting the venture capitalists at the front of the line, ahead of taxpayers, in the event of bankruptcy, which was in violation of the plain letter of the law.
The Committee Members wrote, “Not long after, on February 28, 2011, Solyndra announced that it had received a “˜new $75 million credit facility underwritten by existing investors’ to be used “˜to support Solyndra’s working capital requirements, accelerate the Company’s ongoing cost reduction activities and execute its expanded channel and segment sales and marketing strategy.’ At the same time, Solyndra announced that DOE had modified the terms of its loan guarantee agreement to extend the loan amortization period. Despite having over $1 billion in private capital, it appears as though Solyndra had significant issues with working capital and liquidity throughout the life of the DOE loan guarantee. On August 31, 2011, Solyndra announced it was immediately suspending its operations and filing for bankruptcy. One week later, the FBI executed search warrants at Solyndra’s Fremont offices as part of an investigation with the DOE Office of Inspector General.”
It is the Committee’s understanding that Madrone and Argonaut were significant investors participating in the new $75 million credit facility. In order to better understand the loan guarantee for Solyndra and its subsequent modification, Committee leaders have requested the following information by September 28, 2011:
1. All documents and communications relating to the $535 million loan guarantee, including but not limited to the $75 million credit facility, the planned initial public offering and the cancellation of that offering, the February 23, 2011, restructuring of the loan agreement, and the August 31, 2011, bankruptcy filing.
2. All documents that were prepared for or relating to meetings or telephone calls between the White House or Executive Office of the President (EOP) personnel and Madrone and Argonaut officials, agents, employees, directors, partners, board members, or other representatives, including, but not limited to, presentations, notes, emails, and letters.
The Subcommittee on Oversight and Investigations will hold a hearing on “From DOE Loan Guarantee to Bankruptcy to FBI Raid: What Solyndra’s Executives Knew” this Friday, September 23, 2011, at 9:00 a.m. in room 2123 of the Rayburn House Office Building. Despite earlier pledges that the Solyndra CEO would voluntarily answer the Subcommittee’s questions, lawyers for Solyndra CEO Brian Harrison and CFO W.G. Stover have now declared that the executives will take the Fifth Amendment and decline to answer questions at Friday’s hearing.
View a copy of the letter to Argonaut HERE.
View a copy of the letter to Madrone HERE.