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Solyndra 'repayment' debate was worthless

March 7, 2012: 12:24 PM ET

Solyndra sells its core assets for a pittance.

After Solyndra went bankrupt last summer, critics kept complaining that the Department of Energy had approved a loan restructuring plan that made Argonaut Private Equity senior to U.S. taxpayers. In other words, an affiliate of Obama donor George Kaiser would get repaid first (so would a Wal-Mart heir, but that seemed to go unnoticed).

As I've written before, the only scandal in that arrangement was imaginary.

Argonaut's loan came after that of the DoE, and was made because the company was flailing. So of course it would get repaid first (last money in, first money out). What investor would loan money to a distressed company under any other structure?

Moreover, Argonaut still would be out the more than $270 million in equity it had previously invested.

But there was a second reason why such hyperventilation was unwarranted: Repayment was more theoretical than practical. Solyndra didn't have many assets that anyone would want to buy, particularly given that its technology required that virtually all of its manufacturing equipment be custom-made. Unless someone else was planning to make Solyndra-style panels, then there wasn't much value to recoup.

How little value? Around $3.8 million. That's the price that a bankruptcy court this week approved for the sale of Solyndra's core assets, following an auction. It represents less than 1% of the DoE loan, and only around 5% of Argonaut's loan.

In other words, all this talk about who gets paid back first was a tempest in a photovoltaic teapot.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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