February 17, 2011 / 10:54 PM / 6 years ago

US lawmakers probe solar company loan guarantee

3 Min Read

* Lawmakers question loan guarantee to solar company

* Solyndra received $535 mln guarantee about 2 yrs ago

* Solyndra pulled IPO plans after auditor raised concerns

By Ayesha Rascoe

WASHINGTON, Feb 17 (Reuters) - A top Republican lawmaker on Thursday queried the Obama administration about its decision to issue a $535 million loan guarantee to a solar company that has since run into financial problems.

Representative Fred Upton, who heads the House of Representatives Energy and Commerce Committee, questioned the Energy Department for providing its backing to solar panel maker Solyndra Inc nearly two years ago.

"In the mad dash to spend hundreds of billions of dollars, projects were rushed and the highly-touted benefits from ribbon cuttings were not realized," Upton said in a letter to the department.

Upton and Republican Cliff Stearns, who heads an Energy and Commerce subcommittee, have asked the department to turn over documents and communications related to the loan guarantee.

Solyndra was the first company to receive a loan guarantee under a long-delayed advanced clean energy program created by the a 2005 energy law.

The loan guarantee was aimed at supporting construction of a commercial scale solar panel manufacturing plant. About 3,000 people were to be employed during construction of the plant, with more than 1,000 jobs created once operations began.

Since then Solyndra has announced it would close an older factory and has postponed a planned expansion at the plant for which it received the loan guarantee, the lawmakers' letter said. The letter said due to the delay, it has been reported Solyndra no longer plans to hire an additional 1,000 workers.

The company also withdrew its initial public offering plans last year after it received a warning from its auditor about recurring operating losses, negative cash flows and other factors. [ID:nN18145963]

"While we understand that the purpose of the loan guarantee program is to help private companies engaging in clean energy projects to obtain financing...subsequent events raise questions about whether Solyndra was the right candidate to receive a loan guaranteee in excess of half of a billion dollars," the letter said.

Under the government's loan guaranee program, the department does not provide an actual loan to a company, but instead agrees to repay the commercial loans the company receives in the case of a default.

Editing by David Gregorio

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