This Monday, Solar power provider SolarCity (NASDAQ: SCTY) said that it had raised $345 million to fund new solar projects. After the announcement, SolarCity shares fell 1.4% to $24.70 in premarket trading, the stock market reacted in such way, but bounced back up over 3% during early afternoon trading.
SolarCity also expanded its solar renewable energy credit financing facility to accept five years of hedged facilities in a move the company said will significantly lower its cost of financing and to draw more capital from it. SolarCity formed a special committee to evaluate an acquisition offer made by Tesla Motors Inc. (NASDAQ: TSLA),addressing potential conflicts with directors with overlapping interests in the companies.
Last month, Tesla proposed to buy SolarCity for $2.5-$3 billion. With SolarCity shares ending the week of the offer below the proposed price, the market is telling us this deal is no good. Some in the media called it a “bailout” for SolarCity . The numerous overlapping interests which Tesla and SolarCity have on their boards is reflected in other parts as well.
Elon Musk is the largest shareholder in both firms, with more than 20% holdings in each, and he is chairman of both companies. His cousins Lyndon and Peter Rive are the founders of SolarCity, and both sit on the SolarCity board. In addition, Tesla’s co-founder JB Straubel is on SolarCity’s board and investor Antonio Gracias sits on the board of both companies.
This time, the financing of SolarCity, which came from four partners in June and July, will cover the capital cost of new equipment and installations. In addition to the new funds, the company also added $110 million and two new lenders to its debt facility, which is now is $760 million.