As As SolarCity Corp. prepares to be acquired by Tesla Motors Inc., the leaders of those two companies are putting millions of dollars toward the solar installer's latest round of debt.
nc., the leaders of those two companies are putting millions of dollars toward the solar installer's latest round of debt.
In a filing Tuesday afternoon, SolarCity SCTY, +0.30% said that Tesla TSLA, +0.86% chief executive (and SolarCity chairman) Elon Musk has agreed to buy more than half its latest offering of bonds, putting $65 million toward the $124 million SolarCity hoped to raise. SolarCity cofounders and top executives Lyndon Rive and Peter Rive, Musk's cousins, agreed to buy $17.5 million in bonds apiece, a total of $100 million for the three executives.
SolarCity's business depends on debt - the company offers homeowners the chance to install solar-power systems with little to no money down, and collects monthly payments instead. To keep that system rolling, it has to take on large amounts of debt; as of the end of its most current quarter, on June 30, SolarCity had total debt of $3.25 billion, much of it in the form of bonds or solar asset-backed notes.
SolarCity has relied on institutional investors to invest in the solar-power systems it installed on residential homes in the form of solar asset-backed notes, including hundreds of millions from Alphabet Inc's GOOG, -0.01% GOOGL, -0.05% Google and large banks. The bonds that Musk and the Rives are buying - which mature in 18 months and pay 6.5% interest - are a newer type of offering available to the general public.
The public does not seem to be clamoring to buy the debt, however, as much of it has been purchased by Musk and those close to him. As previously reported by The Wall Street Journal, yet another Musk company has been a big purchaser of these bonds: Private startup Space Exploration Technologies Inc., commonly known as SpaceX, bought $90 million in SolarCity bonds out of a $105 million offering in March 2015, and another $75 million in June, amounts that have since been reinvested in solar bonds after repayment.
Tesla has agreed to buy SolarCity in an all-stock deal worth about $2.6 billion at the time the companies agreed on the acquisition. Musk is the largest shareholder for both companies, and stands to see his SolarCity stake worth much more than he paid in backing the company, purchasing more shares at the initial public offering price of $10, and even a purchase just a few months before the acquisition bid at $17.50 a share. Tesla has agreed to pay 0.11 shares of its stock for every share of SolarCity, which values SolarCity shares at roughly $24.73, as of Tuesday's close.
SolarCity did not immediately respond to a request for comment on the bond sale.
In a filing Tuesday afternoon, SolarCity SCTY, +0.30% said that Tesla TSLA, +0.86% chief executive (and SolarCity chairman) Elon Musk has agreed to buy more than half its latest offering of bonds, putting $65 million toward the $124 million SolarCity hoped to raise. SolarCity cofounders and top executives Lyndon Rive and Peter Rive, Musk's cousins, agreed to buy $17.5 million in bonds apiece, a total of $100 million for the three executives.
SolarCity's business depends on debt - the company offers homeowners the chance to install solar-power systems with little to no money down, and collects monthly payments instead. To keep that system rolling, it has to take on large amounts of debt; as of the end of its most current quarter, on June 30, SolarCity had total debt of $3.25 billion, much of it in the form of bonds or solar asset-backed notes.
SolarCity has relied on institutional investors to invest in the solar-power systems it installed on residential homes in the form of solar asset-backed notes, including hundreds of millions from Alphabet Inc's GOOG, -0.01% GOOGL, -0.05% Google and large banks. The bonds that Musk and the Rives are buying - which mature in 18 months and pay 6.5% interest - are a newer type of offering available to the general public.
The public does not seem to be clamoring to buy the debt, however, as much of it has been purchased by Musk and those close to him. As previously reported by The Wall Street Journal, yet another Musk company has been a big purchaser of these bonds: Private startup Space Exploration Technologies Inc., commonly known as SpaceX, bought $90 million in SolarCity bonds out of a $105 million offering in March 2015, and another $75 million in June, amounts that have since been reinvested in solar bonds after repayment.
Tesla has agreed to buy SolarCity in an all-stock deal worth about $2.6 billion at the time the companies agreed on the acquisition. Musk is the largest shareholder for both companies, and stands to see his SolarCity stake worth much more than he paid in backing the company, purchasing more shares at the initial public offering price of $10, and even a purchase just a few months before the acquisition bid at $17.50 a share. Tesla has agreed to pay 0.11 shares of its stock for every share of SolarCity, which values SolarCity shares at roughly $24.73, as of Tuesday's close.
SolarCity did not immediately respond to a request for comment on the bond sale.
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