In a recent news release, SolarCity Corp. (NASDAQ: SCTY) announced the addition of $345 million in tax equity to its coffers through deals with four separate partners executed in June and July. These financing facilities will cover the capital cost of new equipment and installations, effectively allowing customers to pay less for solar power than they would for grid power. In addition to these new funds, SolarCity also increased its existing debt aggregation facility by $110 million, bringing the total to $760 million. To date, the company’s capital markets team has successfully raised more than $1.5 billion in project financing from 30 different banks and corporate partners in 2016.
In a recent article posted on Fortune, a contributor takes a look at SolarCity’s recent success in securing financing, particularly as it relates to a planned acquisition of the company by Tesla (NASDAQ: TSLA). SolarCity has deep ties with the electric car maker. Elon Musk, billionaire CEO of Tesla, currently owns 22 percent of SolarCity and serves as the company’s chairman, while his cousin, Lyndon Rive, is SolarCity’s CEO. In fact, there’s only one person currently serving on SolarCity’s eight-person board that doesn’t have ties to Tesla. When announcing the planned acquisition, Musk indicated that he believes a combined SolarCity and Tesla could become a trillion dollar company, but many financial analysts took a more apprehensive approach to the merger.
The reasons behind this apprehension were, at least on the surface, sound. Before SolarCity’s recent run of financing, many in the investment community viewed Tesla’s planned acquisition as a potential bailout. When the deal was announced, SolarCity had $3.25 billion in debt, with $1.23 billion due by the end of 2017. However, with over $1.5 billion raised year-to-date, SolarCity’s management team seems focused on sending a message to Wall Street that the company has the financial support required to keep growing in the alternative energy space, even with looming uncertainty surrounding the Tesla deal.
SolarCity’s stock rose two percent on Monday following the financing announcement to $25.55 per share. This is still a far cry from a high of $61.72 in August of last year, which immediately preceded the company’s announcement of plans to slow growth in an effort to become cash flow positive by the end of 2016. Throw in a bit of regulatory uncertainty regarding the future of solar tax incentives and the bankruptcy of major industry player SunEdison, and you’ve got a recipe for solar stock volatility. Still, Tesla’s acquisition of SolarCity seems to be on course.
In an article posted by The Wall Street Journal on Tuesday, Elon Musk stated that, although he has recused himself from the vote over concerns of a conflict of interest, he expects a supermajority of shareholders to support the electric car company’s proposed acquisition of SolarCity Corp. This assumption is supported by Tesla’s stock, which dropped considerably following the merger announcement but has now regained that initial loss and surpassed its pre-announcement price.
For more information, visit www.solarcity.com
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