[Debate] World's Largest Solar Plant, With Second Largest Ever Department of Energy Loan Guarantee, Files For Bankruptcy
Riaz K Tayob
riaz.tayob at gmail.com
Tue Apr 3 09:04:03 BST 2012
World's Largest Solar Plant, With Second Largest Ever Department of
Energy Loan Guarantee, Files For Bankruptcy
Tyler Durden's picture <http://www.zerohedge.com/users/tyler-durden>
Submitted by Tyler Durden <http://www.zerohedge.com/users/tyler-durden>
on 04/02/2012 20:14 -0400
Solyndra was just the appetizer. Earlier today, in what will come as a
surprise only to members of the administration, the company which
proudly held the rights to the world's largest solar power project, the
hilariously named Solar Trust of America
<http://solartrustofamerica.com/>("STA"), filed for bankruptcy. And
while one could say that the company's epic collapse is more a function
of alternative energy politics in Germany, where its 70% parent Solar
Millennium AG filed for bankruptcy last December, what *is *relevant is
that last April STA was the proud recipient of a $2.1 billion
conditional loan from the Department of Energy, incidentally the second
largest loan ever handed
<http://gigaom.com/cleantech/doe-offers-2-1b-loan-guarantee-for-giant-solar-farm/>out
by the DOE's Stephen Chu. That amount was supposed to fund the expansion
of the company's 1000 MW Blythe Solar Power Project in Riverside,
California. From the funding press release, "This project construction
is expected to create over 1,000 direct jobs in Southern California,
7,500 indirect jobs in related industries throughout the United States,
and more than 200 long-term operational jobs at the facility itself. *It
will play a key role in stimulating the American economy,"* said Uwe T.
Schmidt, Chairman and CEO of Solar Trust of America and Executive
Chairman of project development subsidiary Solar Millennium, LLC."
Instead, what Solar Trust will do is create lots of billable hours for
bankruptcy attorneys (at $1,000/hour), and a good old equity extraction
for the $22 million DIP lender, which just happens to be NextEra Energy
Resources, LLC, *another *"alternative energy" company which *last year
received a $935 million loan
<http://www.nexteraenergyresources.com/news/contents/2011/082611.shtml>courtesy
of the very same (and now $2.1 billion poorer) Department of Energy*,
which is also a subsidiary of public NextEra Energy (NEE), in the
process ultimately resulting in yet another transfer of taxpayer cash to
NEE's private shareholders.
As Bloomberg notes
<http://www.bloomberg.com/news/2012-04-02/solar-millennium-s-u-s-units-file-for-bankruptcy-protection-1-.html>:
"The company joins Energy Conversion Devices Inc., a U.S. solar
manufacturer that suspended production last year; LSP Energy LP, the
owner of a natural-gas-fired power plant in Mississippi; Ener1 Inc.,
maker of lithium-ion batteries for plug-in electric cars; solar-panel
maker Solyndra LLC; and energy storage company Beacon Power Corp.
(BCONQ) in bankruptcy."
And so central planning fails again, and again, and again, and again.
But it sure will be better with the centrally planned monetary (and in
the absence of a working Congress - also fiscal) policy. Because this
time it really will be different.
From Reuters
<http://newsandinsight.thomsonreuters.com/Legal/News/2012/04_-_April/Solar_Trust_of_America_files_bankruptcy/>:
Solar Trust of America and several affiliates filed for protection
from creditors with the U.S. bankruptcy court in Delaware. It
estimated to have as much as $10 million of assets, and between $50
million and $100 million of liabilities.
Blythe is about 220 miles (354 km) southeast of Los Angeles.
"We have been working with Solar Trust of America for a couple of
years in getting this project going," David Lane, Blythe's city
manager, said in an interview. "Although the project is not in the
city limits, we are the only city within 100 miles. My sense is that
with the large investment in what was to have been the world's
largest solar power plant, someone somewhere will buy it and build it."
At least someone's reputation will be tarnished as a result of this
latest epic failure of the Obama administration to misallocate capital :
Solar Millennium said it has been sued by former Chief Executive Utz
Claassen over public statements by company representatives that he
claims have damaged his reputation and left him unable to find a
job. Solar Millennium said the lawsuit would not directly affect its
insolvency proceedings.
Two people, however, who won't be humiliated at all are California
Governor Jerry Brown, and Secretary of the Interior Ken Salazar, who
reprise the role of Joe Biden, last seen praising not only MF Global's
Jon Corzine <http://www.youtube.com/watch?v=xm3VMrKqJSA>, but that other
epic administration failure: Solyndra
<http://www.thedailyshow.com/watch/thu-september-15-2011/moment-of-zen---joe-biden-on-solyndra>.
Watch them praise the groundbreaking for the Blythe facility.
Epic embarrassment. And not even a full year ago.
But before that, of course, we had the funding of the plant with a $2.1
billion loan guarantee from the US Department of Energy, the second
largest ever, smaller only than Georgia Power's $8.33 billion loan
guarantee <https://lpo.energy.gov/?page_id=45>.
From the DOE:
U.S. Energy Secretary Steven Chu today announced the offer of a
conditional commitment for a $2.1 billion loan guarantee to support
Units 1 and 2 of the Blythe Solar Power Project, sponsored by Solar
Trust of America, LLC. The concentrating solar thermal power plant
includes two units comprising a combined 484 megawatt (MW)
generating capacity, an eight-mile transmission line and associated
infrastructure. The project will be built adjacent to the City of
Blythe in Riverside County, California and is expected to create
over 1,000 construction jobs and approximately 80 operations jobs.
The plant is estimated to avoid over 710,000 tons of carbon dioxide
emissions annually, equivalent to the annual greenhouse gas
emissions from over 123,000 vehicles.
"Loan guarantees play an important role in facilitating the
development and deployment of innovative technologies at massive
scope and scale," said Secretary Chu. "Continued investments like
this project make solar power more efficient and cost competitive
while creating thousands of jobs and strengthening the economy."
"California is the national leader in clean energy, and our great
state is poised to become the world leader in renewable energy
generation," said Governor Jerry Brown. "I commend President Obama
and Secretary Chu for making another major investment in California."
"This clean energy project will create more than 1,000 jobs and
strengthen the economy of Riverside County. Investments like this
one are critical to reducing America's dangerous dependence on
foreign oil, protecting our children from pollution and creating
clean energy jobs here in California," said Senator Barbara Boxer.
And while we do not know just how much the government will have to pay
out of pocket, we do know that STA had at least $50 million in debt at
filing.
What we do know for sure is that at least the firm's financial advisors
made money on the deal. From the company's Investors
<http://solartrustofamerica.com/investors/index.html>page:
*World-Class Financial Advisors*
In October 2009 Solar Trust engaged Citigroup Global Markets Inc.
and Deutsche Bank Securities, Inc. as advisors to assist in
securing more than $6 billion in financing for construction of the
company's solar power plants in California and Nevada.*Citigroup
and Deutsche Bank are also providing advisory services for Solar
Trust's efforts to develop models for debt and equity project
financing for its solar power plant projects. *
Great job there Citi and Deutsche: can you please advise us how much in
taxpayer cash you received as part of your incalculable "advice" please?
Also, as noted earlier on, as part of its first day filings, the company
was prompt announce the procurement of DIP funding (link), which will
come in the form of a $22.3 million secured loan (against what assets?)
at Libor + 800bps, courtesy of NextEra Energy Resource, LLC. The same
NextEra featured in the following press release:
*NextEra Energy Resources' subsidiary closes on $935 million
financing and secures a DOE loan guarantee for its Genesis solar
project*
JUNO BEACH, Fla. -- NextEra Energy Resources, LLC, announced that
its subsidiary, Genesis Solar, LLC, has closed on construction and
term financing consisting of $702 million in project bonds, a $150
million project term loan facility and an $83 million project letter
of credit facility. The U.S. Department of Energy has provided a
loan guarantee of 80 percent of the principal and interest on the
project bonds and project term loan under its Financial Institution
Partnership Program. Proceeds from the financing will be used
primarily for the construction of the Genesis project, a
250-megawatt utility-scale concentrating solar thermal generating
facility featuring proven parabolic trough solar thermal technology,
located in Riverside County, Calif.
"This financing marks a significant milestone in the development of
the Genesis project," said Armando Pimentel, executive vice
president and chief financial officer of NextEra Energy, Inc., the
parent of NextEra Energy Resources. "We are very pleased with both
the strong investor reception for this financing, which we view as a
validation of our solar development efforts, and the receipt of a
loan guarantee from the Department of Energy Loan Programs Office."
That's right: one ward of the state, bailing out another ward of the
state, all to reduce those evil carobn emissions. Although that is not
all. NextEra is also a subsidiary of the publicly traded, albeit with
very private investors, NextEra Energy (NEE). Which means that every
dollar extracted out of Solar Trust via the DIP, and ultimately via a
Credit Bid in which NextEra will acquire the STA assets at pennies on
the dollar, will go straight to NEE's shareholders. Who are these
shareholders you ask? Here they are: spot the odd one(s) out.
<http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/03/NEE%20Holders.jpg>
And that is how in crony America taxpayer money goes from one insolvent
pocket, to another, to Wall Street, all under the guise of idealistic
pursuits and clean energy.
There is more to this story but we will stop here as we have had enough.
/For those interest here is the first day affidavit
<http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/03/Solar%20Trust%20Affidavit.pdf>,
as well as the DIP term sheet
<http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/03/Solar%20Trust%20DIP%20Term%20Sheet_0.pdf>.
And the last time we saw an Org Chart this fun
<http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/03/Org%20Chart.jpg>,
the company's name started with En and ended in ron./
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