Solargen Energy owes an estimated $142,120 in delinquent payroll
taxes to the Internal Revenue Service and the State of California
in relation to a February 2009 merger with TMEX USA
– the move that propelled the start-up into its status as a
publicly-traded company, according to Solargen’s financial
statements and chief financial officer.
Solargen Energy owes an estimated $142,120 in delinquent payroll taxes to the Internal Revenue Service and the State of California in relation to a February 2009 merger with TMEX USA – the move that propelled the start-up into its status as a publicly-traded company, according to Solargen’s financial statements and chief financial officer.
Solargen, proposing to build a large-scale solar farm in southern San Benito County, formed when it merged early last year with TMEX USA, a then-bankrupted telecommunications company that focused on lines between the United States and Mexico.
For Solargen, bringing such a “shell” company out of dormancy – they often serve as avenues for business transactions but remain largely inactive – allowed for a less-tenuous and less-expensive route toward the public trading needed to gain financing in the $1.2 billion proposal, but it also brought along the delinquent tax debt.
Before TMEX went bankrupt in 2001, the IRS and state employment development department each had placed liens on the liability, which includes interest and penalties, according to Solargen’s filings. In aquiring the company, Solargen also was liable for TMEX debt.
CFO Adam McAfee called it a “non-issue” and said the company and taxing agencies have disagreed on the amount. McAfee said the company and IRS have communicated poorly and it can take months to hear back between discussions.
“I’ve been very aggressive in trying to resolve it,” he said, acknowledging Solargen will end up paying the debt, “but they just don’t communicate with us.”
McAfee, the brother of the largest shareholder Eric McAfee, said the original amount from an eight-month period in 2001 was slightly more than $30,000.
According to Solargen’s first annual report, a 52-page document from early 2009, the debt was first recognized in 2006 as $87,084, while the company had accrued interest and penalties of about $48,200 on that liability.
Adam McAfee said the $142,120 amount is “at least a month and a half of payroll” and that he is “just trying to be responsible.” He said he found out about a “cloud” on the account a couple of days after the merger had closed.
Solargen officials said they are unsure of an exact amount for the liability, but that they carry the $142,120 figure on the books as a projection with annual interest.
McAfee, meanwhile, called such a company formation a “long process.” He noted how a group of “savvy attorneys” brought TMEX out of dormancy a few years ago “so we could raise funds with institutional investors.”
“We wanted to make sure our investors knew we were serious about liquidity,” he said.
