SolarCity revealed in a recent SEC filling that the company expects SpaceX, Elon Musk’s rocket company, to buy $75 million in “SolarBonds”. Earlier this year, SpaceX already purchased $90 million in solar-backed bonds from SolarCity, just 2 months after the aerospace company landed a $1 billion equity deal with Google and Fidelity. If this second purchase goes through, SpaceX will be holding $165 million in SolarCity debt backed by solar assets.
Last year, SolarCity bought Common Asset, a developer of online tools for investors. Through the newly acquired company, they developed a new website through which any US based investor can buy 1 to 15 years bonds by increments of $1,000. The company uses the funds from the bonds to finance solar installations which in turn secure the bonds and offer 1.05% to 5.00% yields.
According to Lyndon Rive, SolarCity’s CEO, SpaceX goes through the same process to buy the bonds as any investor, meaning going through the website. But in SpaceX’s case, SolarCity needs to disclose the transaction with the SEC because of the relations between the 2 companies. Elon Musk is CEO and a major shareholder of SpaceX, he is also Chairman of the board and the largest shareholder of SolarCity. Lyndon Rive and Peter Rive are Musk’s cousins and respectively CEO and CTO of SolarCity. They are also both shareholders of SpaceX.
The 2 companies also share a board member, Antonio Gracias, who is also a board member of Tesla Motors.
This transaction is another example of the synergy between Musk’s companies. The companies share more than just board members and investors. In the past, SpaceX transferred some technology to Tesla and vice-versa. SolarCity also had a cross-promotion contract with Tesla dating back in 2011.
This investment comes just after a major setback for SpaceX, its Flacon 9 rocket exploded Sunday morning on a mission to resupply the International Space Station.