SolarCity offers $124 million in high-interest bonds

On the same day that the copmany announced that it will lay off workers and cut founder salaries, SolarCity initiated a bond offering at a record high interest rate of 6.5%.

August 18, 2016 Christian Roselund

Image: SolarCity

It has been argued that SolarCity is more of a finance company than a solar installer. Access to low-cost capital is essential for the company’s third-party owned solar model, and SolarCity has been a leader in finding new, low-cost sources of cash.

However, the company’s latest bid to raise capital is not coming at a low rate. In fact, through August 30 investors will be able to buy SolarCity 18 month bonds at the highest rate the company has offered yet – 6.5%. The company plans to offer $124 million worth of bonds.

SolarCity says that it will use the proceeds of the offering for “working capital and general corporate purposes, including capital expenditures (including financing the installation of additional solar systems) and potential acquisitions and strategic transactions”.

This announcement came hours before SolarCity announced that as a result of “initiatives to realign the Company’s operating expenses to match the Company’s reduced guidance” SolarCity will lay off an unspecified number of workers, and will reduce founder salaries to $1 per year.

Mercom Capital CEO Raj Prabhu notes that it is difficult to compare this offering to others in the United States, as U.S. solar companies don’t usually make this sort of bond offering. “There are not many in the U.S. to compare it to,” Prabhu told pv magazine.

However, in March 2015 SolarCity secured a $90M investment in solar bonds from SpaceX, at a 2% interest rate.

Correction: This article was corrected at 5:00 PM Eastern Time (U.S.) on August 18. We previously stated that SolarCity had not said what the bond proceeds were to be used for, however SolarCity had made a statement in its prospectus as to the uses, as reflected in the current version of this article. We apologize for the error.

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