SolarCity Gets $113 Million Cash Rescue From Silver Lake, Musk, and Rive -- Bloomberg -- November 18, 2015

Updates

July 25, 2017: dead and gone. Shareholders won't get a thing ... except a huge tax loss they can carry forward. LOL. 

March 29, 2016: SunEdison may file for bankruptcy. 

TerraForm Global, citing SunEdison's liquidity issues, said it would join its parent in delaying its annual report for the year ended Dec. 31.

November 19, 2015: SunEdison closes below $3. Just 10 days earlier it traded at $7.50.

November 19, 2015: SunEdison is tanking again.

Shares in solar energy company SunEdison are down 11% in after hours trading, as a rumor that sent the stock upwards during the day was denied.

The stock gained 7% during Wednesday's trading session on a rumor that Blackstone's credit arm GSO planned to backstop SunEdison's debt. The solar company has seen its stock fall 83% since the start of the year.

After the close Reuters reported that GSO was not looking to invest in SunEdison.

Original Post

 

Last night I posted what we would be talking about today, re-posted below the "fold." Now today Bloomberg reports that SolarCity gets $113 million from Silver Lake, Musk, and Rive:

SolarCity Corp. got a $113 cash infusion from Silver Lake and top executives after the company’s announcement of a strategic slowdown to focus on making a profit sent investors fleeing.

Chairman Elon Musk and Chief Executive Officer Lyndon Rive contributed $10 million and $3 million, respectively, adding to $100 million from Silver Lake’s Kraftwerk fund in the purchase of zero coupon convertible notes, the San Mateo, California-based company said in a statement Wednesday.

The investment comes as the biggest U.S. rooftop solar installer takes a strategic turn. SolarCity has focused on rapid growth since its initial public offering in December 2012, with surging installations driving up costs at the expense of profit. At the end of October, the company said it would slow down, forecasting about 40 percent installation growth for next year compared with as much as 79 percent this year. The shares have slumped 29 percent since then.

As noted above, this is what I posted last night, Tuesday:

What We Will Be Talking About Wednesday

This is not an investment site. Do not make any investment or financial decisions based on what you read here or think you may have read here.

Barron's is reporting:

Shares of solar installation firm SunEdison are down $1.51, or 33%, at $3.05, continuing to feel the after-effects of a disappointing Q3 report on November 10th, that has been followed by stock sales by prominent hedge funds.

Today’s news brings some potentially troubling findings about the company’s debt position, and some worrying signs from Vivint Solar, the residential installation firm that SunEdison is acquiring for $2.2 billion.

Yesterday afternoon, Vivint reported Q3 revenue that topped analysts’ expectations, and profit that was short by a couple pennies. The stock today is down $1.16, or 12%, at $8.42.

The results “severely call into question the health of the Vivint Solar organization (especially in the context of strong results from Sunrun and SolarCity)” writes Credit Suisse’s Patrick Jobin, who has a Neutral rating on the shares.

In particular, installations of only 61 megawatts in the quarter, and a 7% decline in megawatts booked, suggest that “For the company to still achieve prior 2015 guidance of 290-310 MW, Q4 installations would have to be 118-138 MW (+95-128% sequential), a very long putt in our view.”

Jobin thinks the poor showing implies the acquisition itself may be hurting operations, and also that SunEdison investors should be concerned about what the company is likely to be acquiring at this point.

This was from just a few days ago (November 10, 2015): SunEdison Tanks --

Despite revenues increasing more than expected, shares tank. Business Insider is reporting:

SunEdison shares dropped by more than 22% in trading on Tuesday. 

The renewable-energy firm reported third-quarter results before the market open, and posted a wider-than expected loss (excluding some items) of $0.92, versus the estimate for $0.65, according to Bloomberg.

Revenues of $476 million beat the consensus forecast for $452.6 million.

Data points:

• at $5.59/share; lowest in more than two years
• announced last month to lay off 15% of its workforce 
• major investor: hedge fund, Greenlight Capital
• Greenlight Capital recorded its worst monthly performance since October, 2008, most due to SunEdison
• shares popped by as much as 6% on October 30, 2015, on rumors that another hedge fund billionaire had bought a position in SunEdison

For more on Vivant and Solar City (both with similar business models), see this dismal outlook as reported by Motley Fool.

Long term, I think it's becoming clear that leases and power purchase agreements won't be the dominant financing option for homeowners. SolarCity may already be playing from behind with these market changes.

*****************************************

Xilinx Most Likely Next Chip Target -- Barron's 

Citigroup chip analyst Christopher Danely this morning reflects on M&A and concludes that he doesn’t expect analog chip maker Maxim Integrated Products to get bought, and that “Xilinx is the only large-cap semiconductor company left with all of the attributes of a good takeover target.”

Diclaimer: this is not an investment site. Do not make any investment or financial decisions based on what you read here or think you read here. Do not make any travel plans without checking with Homeland Security and the French Tourist Bureau.