SolarCity Corp. and Silver Lake Kraftwerk have agreed to a strategic investment of US$113 million in aggregate principal amount of SolarCity’s Zero Coupon Convertible Senior Notes.
Silver Lake Kraftwerk, Silver Lake’s energy and resource innovation fun, has agreed to invest US$100 million, SolarCity Chairman Elon Musk will invest US$10 million and CEO Lyndon Rive will invest US$3 million. The investment by Silver Lake Kraftwerk is almost quadruple the size of its initial investment in SolarCity made in February 2012, which it subsequently exited in September 2013.
SolarCity provides rooftop solar in the U.S., and currently provides more than one out of every three new residential solar electricity systems. The company provides solar electricity directly to homeowners, businesses and government organizations for less than they spend on utility bills.
“We believe that SolarCity is a highly attractive long-term investment opportunity,” said Josh Raffaelli, managing director at Silver Lake Kraftwerk. “We think the company’s unparalleled access to solar-specific tax equity, asset-backed security and debt clearly differentiates it from providers that are funding projects constantly via equity markets.
:Furthermore, we firmly believe that SolarCity’s near term focus on cost reduction and cash flow breakeven is absolutely the right strategy—the Company is already the leader in both commercial and residential solar. Its technology and brand advantage coupled with its cost structure and low cost of capital position it to continue to grow in 2017 even if the federal investment tax credit steps down. Distributed solar generation is an enormous opportunity and we believe there is no other company better positioned to take advantage of it.”
The notes will be senior, unsecured obligations of the company, will not bear ordinary interest and the principal amount of the notes will not accrete.