By Tom Hals
WILMINGTON, Delaware | Tue Oct 18, 2011 2:21pm EDT
(Reuters) – Executives from bankrupt Solyndra LLC testified on Tuesday that a flood of cheap Chinese solar panels kept it from realizing $1.2 billion in contracts it announced in 2008.
Three years after Solyndra announced those long-term contracts, its cumulative sales total a mere $330 million, company executives said in a meeting with creditors.
The company filed for bankruptcy in early September and days later was raided by the Federal Bureau of Investigation. Solyndra has become an embarrassment for the Obama administration, which provided it a $535 million government loan that now seems unlikely to be repaid in full.
When the company announced the long-term contracts in 2008, solar panel prices were higher and developers of solar projects were scrambling for supply. As a result, three companies committed to three-year or five-year contracts that were touted in the 2008 press release, according to Ben Bierman, the company’s vice president of operations.
However, the solar panel market soon changed. China began pouring billions of dollars of subsidies into panel manufacturing, driving prices much lower. A dearth of supply soon became a global glut.
At the same time, cash-strapped European countries cut incentives for installing solar power projects. As a result, none of the three companies have placed significant orders under their contracts with Solyndra this year, Bierman said.
In a meeting with the Department of Justice last month, company representatives refused to discuss the contracts.
That refusal prompted the government to push the bankruptcy court to replace management and the board of directors with a trustee. The court denied that request on Monday.
Tuesday’s meeting with creditors was required under the bankruptcy code. Officials from the Department of Justice conducted the meeting and Solyndra executives answered questions under oath about their operations, assets and liabilities.
The company’s financial adviser said Solyndra had received active interest from 25 potential buyers for all or parts of its operations. Eric Carlson, of Imperial Capital LLC, said 14 would be considered strategic buyers, the rest financial buyers.
However, no party has committed to act as an initial or “stalking horse” bidder. Bids are due in mid-November.
The bankruptcy case is In re Solyndra LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12799
(Reporting by Tom Hals; Editing by Tim Dobbyn)