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SolarCity Corporation Message Board

  • quantum_analyst quantum_analyst Jun 20, 2013 8:56 AM Flag

    How can Solar City be any better off by borrowing 200 million if...

    They are giving Goldman 2,800,000 shars from which they get not one penny.

    They are in fact simply selling 2.8 million shares, period.

    This transaction is exactly like those that prededed the financial meltdown in is shady, appears to create value out of thin air and is in fact lowing the book value of the stock while NOT elinating any float and in fact increasing the float by paying interest on the convertibles. No company that is sound financially gives the underwriter stock for issuing convertibles, you guys do know that right?

    So Goldman loans them 500 mil and then gets 2.8 mil shares in order to see 201 mil in convertibles for which they also get a cut.

    Goldman will hedge these shares anticipating the stock dropping ( a CDO - remember them?) using the sale of the convertibles so they lose 0 dollars as the stock drops, they have secured their profit, and as the stock goes down the convertibles will drop as well and Goldman having already dumped them will then buy them back at a profit.

    They win, win, win and solar City gets nada excpet more debt and the extra convertible interest payable quarterly - which interest is PRIMARY AHEAD OF THE COMMON SHAREHOLDERS !

    If you think this is anything more than a financial scam then you do not know how to analyze equity and current debt to equity and the real nature of convertibles.


    Sentiment: Strong Sell

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    • Investing at a low interest rate for a steady rate of return in the future - Just like a bank only no Sub Prime.

      Sentiment: Buy

    • Just read SCTY's last 10-Q and the risk factors - if interest rates rise they lose and they still must pay the "fund participants" - you know this right, they appear to have deferred income from the leases but in fact they have sold this deferred income to various "funds" who are guarnteed to get rep[aid with interst out of Solar City's retained earnings and/or cash flow.

      Solar City is nothing more than a solar system mortgage company.

      When they default on the first payment to their "funds" they will get liquidated and you will still have to pay your l;ease.

      ALSO - look at the part of the 10-Q that states how they get a UCC-1 filed against everyt home they lease a ssytem to. This filing insures that noone except them gets the solar ssytem when your house is foreclosed and also that the leasze IS NOT part of the foreclosure as they have identified it using the UCC-1 as NOT PART OF THE HOME. So you might walk away like they did in the past few years but you will still be hounded for your lease payment reven when you do not live in the home anymore!

      IYou guys need to read their filings and you will see they ARE NOT that big utility company of the future dlike you think.

      They are just a finance company issuing 20 year loans period.

      Sentiment: Strong Sell

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