There are no disclosures by SolarCity about the total money raised from the bond issue, and how the collected capital will be utilized. If a company goes bankrupt, for example, bondholders – even those holding unsecured notes – are usually paid before shareholders.
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On August 17 SolarCity said it is selling United States dollars 124 million of 6.50% solar bonds, maturing in February 2018.
A recent bond offering to shore up Solar City Corp. was primarily financed by Elon Musk, the company’s chairman, and two of his cousins who are executives with the rooftop solar outfit. However, Mr. Musk had to face fury from board of directors initially over this merger, but later on succeeded to convince the shareholders.
SolarCity has been under intense pressure to slash its expenses and turn a profit after years of losing money. The Rive brothers have requested that their annual salaries be cut to Dollars 1 in line with the effort.
In the second-quarter fiscal 2016 (2QFY16), the company reported a quarterly loss of $250 million. It has forecast that in the third-quarter it will report an adjusted loss of between $2.55 and $2.65 a share. Solar City with a pessimistic approach stated that the LPS could increase to $2.55-$2.65 in 3Q.
While SpaceX, Mr. Musk’s space transportation service and rocket manufacturing private company, has previously purchased corporate bonds in SolarCity, Mr. Musk himself has done it for the first time.
Musk’s purchasing of SolarCity bonds comes at a time when Tesla is working to conclude its planned acquisition of SolarCity.
The Silicon Valley company declined to offer details before the announcement, but its shares were up about $3.20 or 1.4 percent in early afternoon trading at 226.13 a share. The automaker also urged customers to buy its expensive vehicles as improved sales would lead it to develop Model 3.
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Investors seemed happy with the development as Tesla and SolarCity shares surged 0.45% and 0.26%, respectively in the premarket today.
