Vivint Solar Inc. (NYSE: VSLR) was the only solar company making waves in the market on Tuesday on word that it closed a substantial loan. The company announced that it closed a $200 million loan just in the past week.
Note that Vivint only has a market cap of about $370 million.
Basically, Vivint secured this facility through its cash flows from its residential solar business. This financing will allow the company to fund even more customer installations and provide partial credit for Solar Renewable Energy Certificate (SREC) revenues, which in turn will enable a faster return of working capital to support Vivint’s growth.
This financing was designed to provide immediate liquidity, with the option to upsize and fund expected future growth beyond 2016. Vivint believes it will provide significant flexibility, as compared to several recently closed transactions in the residential solar market.
The loan is accessible in two tranches. The first is a shorter-term of $75 million priced at LIBOR plus 5.5%. The second is for a total of $125 million that can be drawn over time to fund future growth. If Vivint decides to draw on the second, pricing will increase to LIBOR plus 8.0%, and the term will extend to four years on the entire $200 million facility.
Thomas Plagemann, executive vice president and head of Capital Markets of Vivint Solar, commented:
This financing demonstrates Vivint Solar’s continued ability to access capital markets for flexible capital. Now that we are free from the constraints of the terminated SunEdison merger agreement, we have demonstrated our ability to rapidly access the capital markets for flexible, term-debt financing to support our continued growth.
This is the first step in a series of anticipated financing activities that were put on hold as a result of the now terminated SunEdison merger.
Shares of Vivint were trading up about 6% at $3.57 on Tuesday, with a consensus analyst price target of $7.10 and a 52-week trading range of $3.29 to $16.00.
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