Failed Solar Company's Auction Draws Small-Biz Bargain Hunters
To some people, the bankruptcy of the solar-module maker Solyndra shows the folly of government trying to pick winners in technology markets. To others, the furor over its $535 million federal loan guarantee represents an attack on the solar industry and the Obama administration’s clean energy policies.
And then there are those who see bargains on slightly used scanning electron microscopes, walk-i
n ovens and multiton cranes.
This week, auctioneers will sell off many of Solyndra’s assets, including Herman Miller chairs, laptop computers and miles of copper wiring. But the real steals will lie in the exotic manufacturing tools, which could go for 25 to 90 percent off.
Solar start-ups and other technology companies are already scouting for deals in the auction, which will be conducted in person and online on Wednesday and Thursday.
“A commercial electron microscope can sell for $600,000 to $1 million. A used one at auction can sell for $750,000 to $250,000,” said Michael Bartholomeusz, chief executive of AQT Solar, which plans to join the bidding. “The equipment is probably in pretty good condition. A lot of these tools are made to last in a productive environment for five to 10 years.”
Solyndra probably will not be the last clean energy company offering discounts on its industrial equipment.
On Sunday, Beacon Power of Massachusetts, a maker of flywheel systems used to store electricity, filed for bankruptcy protection. The company, which had promoted its technology for managing the electricity produced by solar and wind power plants, had received a $43 million federal loan guarantee and had borrowed $39 million of that amount.
Solar has become one of the more active segments in industrial liquidation auctions, said Ross Dove, a managing partner at Heritage Global Partners, which will conduct the Solyndra auction.
In October, Heritage handled the sale of the assets of SpectraWatt, a defunct solar company spun out of Intel in 2008, to Canadian Solar for $4.95 million. SpectraWatt had raised over $90 million from private investors and received loans from New York State. Court documents show SpectraWatt has liabilities totaling more than $38 million.
Four or five other solar auctions could occur in the coming months, Mr. Dove said. BP Solar unloaded equipment through Heritage earlier this year.
Prospective bidders in the Solyndra auction were allowed a look at the equipment on Monday at the company’s Silicon Valley headquarters.
"There are no warranties. You buy as-is."
The dizzying array of items for sale, on display in four buildings for the preview, underscores the complexity of modern manufacturing. One room contained a collection of environmental testing chambers, used to heat solar panels at 85 degrees Celsius (about 185 degrees Fahrenheit) at 85 percent humidity for 1,000 hours.
Another piece of machinery, a corrosion chamber from Singleton, simulates salty seaside fog.
Aaron Robinson, a regional sales manager for Envirotronics, was browsing, with an eye on possibly buying some items cheap and flipping them for a quick profit. But buyers need to beware, he said. “There are no warranties. You buy it as-is,” he said. “We don’t even know if they work.”
Ted Martinez, president of MCT Industries, a military contractor in Albuquerque, flew up to check out the selection of industrial robots. He said a Kuka robotic arm (lot number 709) might sell new for $150,000 to $200,000, but at auction, it’s possible to buy one for $30,000 to $60,000.
Of course, not everyone will walk away happy.
Terry Liu, a marketing manager for Quanta Laboratories, a testing and verification company in nearby Santa Clara, Calif., was looking at a batch of copper tubes and wires. “It’s probably a great deal,” he said.
Unfortunately, the auction lot consists of 40 pallets of cables, far more than he needs. “I only have a 28,000-square-foot warehouse,” he said.
Mr. Dove declined to estimate how much money the auction might bring in, although the proceeds might not put much of a dent in Solyndra’s liabilities, which stood at $749 million as of Jan. 1.
Taxpayers will probably have to wait until later in the month, when Solyndra’s intellectual property and real estate will be sold in a separate proceeding, before learning whether they will recover any money from the company’s bankruptcy. Under a deal approved by the Energy Department during the company’s final months, private investors are entitled to recover $69 million from the asset sales before the government gets any money.
The Dove family is in some ways the technology industry’s go-to undertaker. In the 1970s, Ross and his brother Kirk took over a mercantile business founded by their grandfather and moved into industrial auctions.
The family handled the sale of the roll-top desk once owned by Fred Joseph, the former chief executive of the junk-bond firm Drexel Burnham Lambert, and patents for a putter owned by a golf club manufacturer.
“My little brother Kirk sold the big ‘E’ from the Enron lobby,” Mr. Dove said.
In the 1990s, the brothers began buying up regional auctioneers and sold the business, then called DoveBid, to GoIndustry in 2008. Heritage was formed right after that.
“We do really well in bullish economies because there are a lot of mergers and acquisitions,” Mr. Dove said. “We also do well in distressed economies because there are a lot of insolvencies and plant closures.”
And Solyndra is not the only client with starry-eyed dreams that came crashing down to earth: on Nov. 11, Heritage will sell the remains of Rocketplane Kistler, a Wisconsin company that was trying to build reusable spacecraft for NASA.