Musk’s purchase of the so-called “solar bonds” comes after money-losing SolarCity last week said it would cut operating costs to bring expenses in line with its reduced solar installation outlook.
SolarCity CEO Lyndon Rive and Chief Technology Officer Peter Rive are each buying another $17.5 million of the $124 million offer, according to the SolarCity filing.
Read more "Tesla’s Elon Musk Buying Over Half of SolarCity Bond Offer"
The slippery slope of a debt-filled company
SolarCity’s value quickly evaporates and even goes negative if we just discount the company’s cash flows at an appropriate discount rate. And I would argue that the assumptions that go into the current NPV calculation are too aggressive, and the 8% discount rate is also too low.
It looks like SolarCity is desperate for cash, and the only way investors are going to give it to them is by raising the cost. That’s a slippery slope for any solar company.
This is a growing problem for SolarCity, and will become a problem for Tesla Motors if it acquires the solar installer. Debt is fuel for SolarCity’s business, and the cost of fuel is going up big time.
Read more "SolarCity Has a Big Problem On Its Hands"
Meanwhile, SolarCity plans to offer integrated power-generating roofs in addition to the solar-power panels it has been installing on existing structures.
Neither company has yet become fully profitable, and the share prices for both companies trended downward in today’s trading. This week, Musk and other SolarCity executives reported that they purchased tens of millions of dollars worth of bonds issued by the company – a move that CNBC said stirred concerns among some industry observers.
Read more "Feds approve $2.6 billion Tesla-SolarCity merger, but stock market says ‘meh’"
In short, SolarCity shareholders know what they’re getting with this merger — an unexpected bailout. Tesla shareholders are not so fortunate, and SolarCity’s bad balance sheet may be the least of what they have to deal with.
Read more "Are Tesla Investors Getting A Raw Deal In SolarCity Merger?"
Elon Musk’s purchase of $65 million of SolarCity debt is highly unusual and does not send a good signal to investors, says a corporate governance scholar.
Read more "Elon Musk’s, Rives’ SolarCity bond purchases are ‘very odd’"
SolarCity will soon have fewer employees to carry out chairman Elon Musk’s clean-energy dreams for the California solar installer. SolarCity cofounders Lyndon and Peter Rive this week announced a “realignment” that will involve laying off an unspecified number of workers by the end of this year, according to an Aug. 17 regulatory filing.
Read more "SolarCity to Lay off Hundreds of Workers"
Author: Edward Niedermeyer Source: AFR Elon Musk’s second “master plan” for Tesla Motors arrived much like one of the electric automaker’s cars: brilliant and inspiring, but late and rough around the edges. And like Tesla’s desirable yet quality-challenged cars, Musk’s vision is sure to be embraced and evangelised by anyone who was already convinced that […]
Read more "Elon Musk’s Tesla plans are all futuristic promise with no product"