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Solyndra Sale Puts Auction Firm in Spotlight

This week’s auction of property being conducted by San Diego-based Heritage Global Partners probably wouldn’t garner any attention but for the name of the client.

The first sale scheduled for Nov. 2 and 3 entails the noncore assets of Solyndra LLC, the Fremont-based manufacturer of solar panels, which filed for bankruptcy Sept. 6 shortly after defaulting on a $535 million federal loan.

Those facts plus the personal endorsement of President Barack Obama and heightened media coverage have helped HGP to attract far more bidders than usual for a similar type of business, said Kirk Dove, a managing partner for Heritage.

Name Recognition

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“We had another auction of a solar panel company earlier this year, and it did well, but it didn’t attract the interest that Solyndra has. They’ve been on the front page literally daily, and obviously that has attracted the public interest at a much greater level.”

Dove said the auction has registrants from across the nation and in Asia and Europe. The event being conducted under the direction of a federal bankruptcy court judge aims to sell thousands of assets including finished solar panels and other inventory, manufacturing equipment, office furniture, computers, networking equipment, machinery and spare parts, according to a Heritage announcement.

Dove said a second auction scheduled for Nov. 16 will sell all the essential manufacturing equipment necessary for the company to continue as a going concern, its patents and other intellectual property.

The most expensive items in the noncore auction are several solar panel manufacturing machines and semiconductor fabrication machines, each which cost “multimillions”of dollars when originally purchased, Dove said.

The bidders on the Solyndra assets represent a wide cross section of groups including manufacturers in the solar and semiconductor industries, electrical testing companies, computer equipment and industrial equipment resellers, and consumers. The opening bids will be determined at the time the various lots of goods are put up for sale, with a general starting bid that usually is 5 to 10 cents on the dollar of values assigned by Heritage officials, Dove said.

Unlike auctions most people are familiar with where the auctioneer speaks at a rapid clip to pump up the price, industrial auctions are more akin to the kind of bidding competition that occurs for fine art, Dove said.

That’s partly due to the event being broadcast globally via the Internet, and the presence of many bidders whose first language may not be English. “The auctioneers have to talk at a pace that’s swift, but also to make sure they’re enunciating clearly,” he said.

HGP was one of the early pioneers of holding auctions over the Internet when their business was called Dove Brothers, and later DoveBid. The latter entity grew to about 600 employees working in 40 offices in 28 countries before it was sold in 2008 to GoIndustry. The following year, Kirk and his brother Ross re-launched as HGP.

Going Over the Falls

The brothers have overseen auctions for some high-profile business failures including Enron Corp. in 2002, and about a decade earlier, assets belonging to Drexel Burnham Lambert, the investment/ brokerage firm headed by Michael Milken.

The auction for Enron, a gas and energy trading firm in Houston, was memorable because of the company’s incredible success and spectacular failure, Dove said. “We even sold the big E that was outside the building,” he said. According to a published report the tilted E logo was sold for $44,000.

Joe Budano, chief executive for Energy Innovations Inc., a Poway maker of solar panels, said Solyndra’s technology showed promise when the prices for solar was about $2 per watt, but over the past 18 months those prices have been slashed by half.

Because the Chinese government invested about $50 billion into its solar panel industry, the Chinese manufacturers control 60 percent to 70 percent of the world’s market, Budano said.

While he supports direct federal investment into domestic solar businesses, Budano said the government should have spread the money around more. “Our equipment isn’t as capital intensive,” he said. For about a $10 million loan, his firm would have been able to create a lot more jobs, he said.

Solyndra failure resulted in the layoff of about 1,100 workers. In its bankruptcy filing, the company listed assets of $859 million and debt of $749 million as of Jan. 1.


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