Tesla wants to buy Solar City, become an integrated sustainable energy business

Musk wants to offer an integrated solution at Tesla stores: Solar to storage to vehicles.

Read the whole story

 

[Lonyo]

Megalomania[/url]":5e3lbrmg]It seems odd not to mention that Musk has an ownership stake in Solar City; they also (as far as I know) have not been doing terribly well as of late - their stock is down quite a bit from its all time high - and the optics of this look pretty bad (billionaire bails out own company using other publicly owned company). This is not to say anything untoward is happening, but from my unimportant perspective, I don't see the value in dropping 2+ billion on this when they've got some huge challenges that already put them in do-or-die mode regarding the Model 3 (yes, it could also be a stock deal).

On the other hand, if it's doing poorly it could make for a bargain purchase, especially when it does synergise with Tesla's business.

 

[Lonyo]

The FT had a nice writeup with a bit more depth on the financial ties.

Contrary to what someone posted, Musk in fact owns MORE of SolarCity (22.5%) than of Tesla (21.1%) although the value is less.

Fidelity Asset Management are the second largest shareholder of both at 11.1% of Tesla and 14.9% of SolarCity.

More significantly (arguably):

Mr Musk’s financial ties to SolarCity are also complicated. SpaceX, his private space company, has invested $165m in SolarCity’s bonds. Along with Lyndon Rive, he has also personally invested $13m in the company’s convertible debt. And Mr Musk has pledged 4m of his 22m SolarCity shares as collateral against personal borrowings from Morgan Stanley.

A steep fall in SolarCity’s share price this year has increased the possibility he might have to put up more collateral. At the same time, the solar company’s financial position has increased the risk from its borrowings. In a note to clients before Tesla’s buyout proposal was announced, Goldman Sachs said the company might be at risk of breaching a covenant on a $399m revolving credit facility this quarter. The bank added, however, that it did not expect such an outcome, and that SolarCity should not face the same risk in future quarters.

http://www.ft.com/cms/s/0/e8272396-3839 ... 6126f.html (paywall)

Basically he has his fingers in pies that have fingers in each other.