SolarCity Revises Silevo Merger Deal

SolarCity Corp (NASDAQ:SCTY) has disclosed in a recent SEC filing that it will pay some of the acquisition cost in cash, rather than shares, in completing its purchase of PV manufacturer Silevo.

The acquisition is intended to support SolarCity’s rapidly growing installation business.

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SolarCity’s deal with Silevo

As reported earlier, SolarCity Corp (NASDAQ:SCTY) announced its intention to acquire high-efficiency photovoltaic panel maker Silevo Inc for $200 million, with the deal primarily composed of stock. SolarCity has announced that it will build one of the world’s largest panel manufacturing plants in New York, targeting a 1GW capacity in the next two years.

As part of the acquisition, SolarCity said it would pay $200 million up front for the currently private Silevo, which includes the assumption of liabilities. SolarCity will add up to $150 million in earnout provisions in the form of stock as well. This deal marks the biggest use of SolarCity’s stock in the company’s history.

Revised terms for Silevo deal

In its amended deal entered on September 5, SolarCity Corp (NASDAQ:SCTY) would pay some of the acquisition costs in cash, rather than in shares. The PV manufacturer, Silevo has three key milestones to achieve for its investors to receive full remuneration of the $200 million all stock transaction that stands at a further $150 million in respect to milestones. The Elon Musk-led company said that the amendment would relate to Silevo investors that reside outside the US.

Initially, payouts were planned in two 50MW ramp phases at US$50 million a phase, and a final US$50 million in earnings for a 100MW production ramp and production cost level (undisclosed) by 2016.

The amendment envisages the earnout consideration to be paid upon achieving three specified production milestones by the Silevo business unit. Each production milestone provides for the potential payment of up to $50 million of earnout consideration. The amendment provides for the first earnout to be paid prior to December 31, 2015 if Silevo completes a new research and development production facility located in the U.S. capable of volume production with target efficiency requirements.

The second earnout will be payable prior to December 31, 2017 if Silevo achieves both volume production and with target efficiency requirements at the R&D production facility, while also completing and commissioning its first 1GW facility. The third earnout will be payable before December 31, 2017 if Silevo achieves volume production with target cost and efficiency requirements from the 1GW manufacturing facility.