Today SolarCity announced that it has raised $305 million in a cash equity transaction, which combined an equity investment by a private fund with an 18-year loan. This follows on SolarCity securing $227 million in tax equity financing from John Hancock in May.
SolarCity describes that the latest deal is as a “a significant improvement over its first cash equity transaction” noting that by separating the debt and equity portions of the deal it was able to achieve a pre-tax weighted average cost of capital at 7.4%. Under the John Hancock deal SolarCity is paying an 8% weighted cost of capital.
The 18-year loan is syndicated to five institutional investors, and SolarCity says that this is the first syndication of a long-dated, fully amortizing loan for distributed solar assets. The portfolio of projects in today’s transaction represents 230 MW of PV capacity spread across 15 states, with the vast majority of installations completed in 2015 and 2016.
Mercom Capital says that it is difficult to fully evaluate this deal as SolarCity has not yet issued an 8-K with details of the transaction, but notes that SolarCity did achieve a better rate than the previous deal. “SolarCity is always looking to monetize their future cash flows at the cheapest rate possible,” Mercom Capital CEO Raj Prabhu told pv magazine. “In terms of financing, they are always tinkering to see what works and to keep pushing the envelope.”
This successful raising of capital comes at a good time for SolarCity, which has had a troubled past few months since the pending merger with Tesla Motors was announced. SolarCity missed its Q2 guidance and reported heavy losses, and is in the process of laying off 108 staff in California. Additionally the company has issued a high-interest corporate bond offering, which was mostly purchased by Elon Musk and top executives at SolarCity.
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