SolarCity (SCTY) has built its business selling most of its customers on the option to get a rooftop solar system with no upfront costs. That approach makes solar energy affordable to lots of people who might not otherwise be able to afford solar power, but it requires SolarCity to constantly raise hundreds of millions of dollars to cover the upfront cost associated with the sales. (Clearly, SolarCity intends to make enough off of customers to pay back its debt over the coming decades while also making a healthy profit.)
Citi has now agreed to provide $347 million more in funding to SolarCity to help pay for installations for homeowners and small businesses. Coupled with a $305 million cash equity funding arrangement agreed to earlier this month, the new financing will give SolarCity more than $650 million in new financing to pay for its solar installations.
With investors and regulators looking carefully at the proposed acquisition of the company by Tesla Motors (TSLA), concerns have been raised about whether SolarCity is suffering from a liquidity squeeze. The merger has caused some lenders to hold back on advancing any new money to the company. The Citi funding goes a long way toward providing the company with the cash it needs to continue normal operations.
The Citi arrangement involves two separate funds. One is expected to provide financing for $284 million in residential solar projects across the country, while the second is aimed at financing about $63 million in projects for small and medium-sized businesses in California.
With its liquidity problems solved for a while, SolarCity announced this week that Radford Small, the company’s executive vice president of global capital markets, will be its new chief financial officer. Radford, who joined SolarCity last year from the clean technology and renewables group at Goldman Sachs, will take over the company’s top financial position from Tanguy Serra, SolarCity’s president. Serra plans to leave the company at the end of the year.
“Due to overlap at the new company (SolarCity is in the process of being acquired by electric vehicle maker Tesla Motors), he is going to pursue a new venture,” said Lyndon Rive, SolarCity’s CEO in a written statement.