SolarCity Gets $113 Million From Silver Lake, Musk and Rive

  • Investments in convertible notes follow slump in shares
  • Silver Lake Kraftwerk says SolarCity strategy shift positive

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.

“We firmly believe that SolarCity’s near-term focus on cost reduction and cash flow break-even is absolutely the right strategy,” Josh Raffaelli, a managing director at Silver Lake Kraftwerk, said in the statement.

The notes have an initial conversion price of $33 each and expire in 2020, according to the statement. Shares rose 4 percent to $27.04 at 10:02 a.m. in New York.

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