Solyndra wins $7 million DIP increase, extension amid talks on plan

By Jim Witters

Wilmington, Del., June 15 - Solyndra LLC won court approval June 15 to increase its debtor-in-possession financing facility by $7 million and to extend its maturity date through Sept. 19.

To gain approval, Solyndra reached an agreement with landlord Global Kato HG, LLC that includes the withdrawal of Global Kato's objection to the DIP changes. Global Kato leases property to Solyndra in Fremont, Calif.

iStar CTL I, LP, which leases property to Solyndra in Milpitas, Calif., also objected to the DIP changes. In response, attorneys included language in the DIP order that preserves iStar's objection, but defers it to allow the DIP changes to become effective while negotiations with Solyndra continue.

Solyndra attorney Bruce Grohsgal said the agreement with Global Kato is an important step toward formulating a Chapter 11 plan, which he hopes to file with the court within three weeks.

Global Kato settlement

The agreement Grohsgal outlined in court includes the following:

• Global Kato will be given permission to begin drawdowns on a letter of credit issued by Solyndra;

• Global Kato will be allowed a $917,000 administrative claim that Solyndra will pay upon the court's approval of Solyndra's rejection of the Global Kato lease;

• Global Kato will hold an $11 million claim against debtor 360 Degree Solar Holdings, Inc.;

• Global Kato will hold a $6.4 million claim against Solyndra;

• $250,000 held in a cash escrow account will be released to the debtors and to the DIP lender;

• Global Kato will assume responsibility for environmental cleanup at the site up to $848,000 and will hold a general unsecured claim for any remainder if cleanup expenses exceed $848,000;

• Global Kato will hold a $250,000 claim for mechanics liens and potential environmental closure fines; and

• Global Kato will be reimbursed for any utility costs incurred by Solyndra, but left unpaid.

iStar objection

The iStar objection centers on the amount Solyndra proposes to pay the landlord of its Milpitas, Calif., property Grohsgal said.

Solyndra's monthly lease payment for the Milpitas property is $128,842, according to court documents.

When Solyndra stripped out its equipment for sale, it left iStar's 80,000-square-foot facility strewn with scrap, much of which is contaminated with lead, the iStar objection states. There is no budget item for cleaning up the Milpitas site.

The parties are continuing negotiations on the payment amount.

Solyndra is a Fremont, Calif.-based manufacturer of cylindrical solar photovoltaic systems for large industrial and commercial rooftops. The company filed for bankruptcy on Sept. 6, 2011. Its Chapter 11 case number is 11-12799.

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