Complete Solaria Eliminates $67.6 Million of Private Equity Debt

Rhea-AI Summary

Complete Solaria, a leading solar technology and services company, has eliminated $67.6 million of private equity debt from its balance sheet. The debt cancellation involved agreements with Carlyle and Kline Hill Partners, where Carlyle's claims were settled for $10 million and Kline Hill's for $8 million. This was funded by T.J. Rodgers through an $18 million convertible debenture purchase. Notably, the private equity partners reinvested the settlement amounts back into the company, ensuring $18 million in new working capital. This strategic move aims to strengthen the company's financial position and future growth.

Positive

• Elimination of $67.6 million in private equity debt.
• Reinvestment of $18 million by private equity partners into the company.
• New working capital of $18 million achieved through reinvestment.

Negative

• Settlement required $18 million in cash, potentially indicating past financial stress.

Insights

Financial Analyst

Complete Solaria has successfully eliminated $67.6 million of long-term debt from its balance sheet. This is a significant step, as reducing debt can improve the company's financial health, making it a more attractive investment. By converting debt into working capital through the issuance of convertible debentures, the company has not only managed to clear its obligations but also secured additional funds for future operations. Convertible debentures are a form of long-term debt that can be converted into equity at a specific price, offering flexibility for both the company and investors.

From a financial perspective, the terms of the debenture are quite investor-friendly, featuring a 12% coupon rate and a 50% conversion premium. This implies a considerable incentive for investors, potentially making the company's stock more appealing in the future. However, the absence of covenants or securitization terms might suggest a higher risk if the company's financial situation does not improve as anticipated.

In the short term, the elimination of debt and the additional working capital can provide liquidity and operational flexibility. In the long term, this move could enhance shareholder value, provided the company utilizes the new funds effectively and continues its growth trajectory. Investors should monitor how Complete Solaria uses this capital and its subsequent financial performance.

Market Research Analyst

From a market perspective, the elimination of a substantial amount of debt and the influx of $18 million in working capital positions Complete Solaria competitively in the solar technology sector. This sector is highly capital-intensive and securing additional funds without taking on more debt can be a strategic advantage. The re-investment by private equity players indicates a strong endorsement of the company's future prospects and business strategy.

The solar industry is poised for significant growth, driven by the increasing demand for renewable energy and supportive government policies. Complete Solaria's ability to attract such investments showcases its potential to capitalize on these trends. However, the company must continue to deliver on its operational goals and leverage this capital to drive growth and innovation to stay competitive in this dynamic market.

Investors should keep an eye on how the company deploys these funds into projects, research and development and expansion plans. The market's response to these strategic moves will be important in determining the company's future stock performance.

LEHI, Utah, July 01, 2024 (GLOBE NEWSWIRE) -- Complete Solaria, Inc. (“Complete Solaria” or the “Company”) (Nasdaq: CSLR), a leading solar technology, services, and installation company, today announced that it had cancelled $67.6 million in debt from its balance sheet and been released from its obligations under that debt by its two private equity (PE) providers, Carlyle and Kline Hill Partners.

On May 15, 2024, the Company announced that it had signed an agreement with Carlyle to set aside all of its financial claims in return for $10 million in cash. Today, we announce an equivalent deal with Kline Hill Partners for $8 million.

On June 17, 2024, the Company announced that T.J. Rodgers had funded the $10 million payment to Carlyle by purchasing a convertible debenture security from the Company through Cantor Fitzgerald & Company. Today, we announce that the investment by T.J. Rodgers has been increased from $10 million to $18 million to fund both private equity settlement deals.

Complete Solaria CEO, T.J. Rodgers concluded, “The reason for this press release is to announce that Complete Solaria is free of all of its prior private equity debt obligations, and that we have eliminated $67.6 million of long-term debt from our balance sheet.”

Rodgers added, “When I drafted the press release above last week, I expected that the Company would exit that deal short on cash because the entire $18 million invested in the Company would be consumed in cash settlements. The latest good news is that on closing day, Sunday, June 30, after our private equity partners had studied the Company’s investor-friendly convertible debenture offering – which featured a 12% coupon and 50% conversion premium ($1.68 strike price) with no covenants or securitization terms – both of them found the convertible debenture terms compelling and agreed to re-invest the $18 million payment due them back into the Company. This means that my investment in the convertible debenture will cycle through the Company twice, once to pay off the private equity partners and once again to provide $18 million in new working capital.”

Rodgers concluded, “I would like to thank Andrew Kapp of Carlyle and Rick Orlando and CEO Mike Bego of Kline Hill Partners for their support, and Andrew Apthorpe of Cantor for his skill in developing the convertible debenture vehicle.”

About Complete Solaria
Complete Solaria is a solar company with unique technology and end-to-end customer offering, which includes financing, project fulfilment and customer service. Complete Solaria’s digital platform together with premium solar products enable one-stop service for clean energy needs for customers wishing to make the transition to a more energy-efficient lifestyle. For more information visit www.completesolaria.com and follow us on LinkedIn.

Forward Looking Statements 
This press release may contain certain forward-looking statements within the meaning of the federal securities laws with respect to the referenced transactions. These forward-looking statements generally are identified by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” and similar expressions, but the absence of these words does not mean that a statement is not a forward-looking statement. Forward-looking statements are forecasts, predictions, projections and other statements about future events that are based on current expectations, hopes, beliefs, intentions, strategies and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release the price of Complete Solaria’s securities may be volatile due to a variety of factors, including changes in the applicable competitive or regulatory landscapes, variations in operating performance across competitors, changes in laws and regulations affecting Complete Solaria’s business, and changes in the combined capital structure; the ability to implement business plans, forecasts, and the evolution of the markets in which Complete Solaria will compete.

Readers should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2024. Such filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Complete Solaria assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

For investor inquiries, please contact:
Complete Solaria, Inc.
Genevieve Swords
Phone: +1 (510) 270-2537
CompleteSolariaIR@icrinc.com

Source: Complete Solaria, Inc.

FAQ

What major financial change did Complete Solaria announce in July 2024?

Complete Solaria announced the elimination of $67.6 million in private equity debt.

How did Complete Solaria settle its debt with Carlyle?

Complete Solaria settled its debt with Carlyle by agreeing to a $10 million cash payment.

What was the settlement amount Complete Solaria agreed to pay Kline Hill Partners?

Complete Solaria agreed to pay Kline Hill Partners $8 million.

Who funded the settlement payments for Complete Solaria's debt?

T.J. Rodgers funded the settlement payments through an $18 million convertible debenture purchase.

How was the $18 million invested by T.J. Rodgers used?

The $18 million was used to settle debts with private equity partners and was then reinvested back into the company, providing new working capital.

What financial instrument did T.J. Rodgers use for the investment?

T.J. Rodgers used a convertible debenture with a 12% coupon and a 50% conversion premium.

What is the significance of the debt elimination for Complete Solaria?

The debt elimination strengthens Complete Solaria's financial position and provides $18 million in new working capital.