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SolarCity Adds Financing, Names CFO Ahead Of Tesla Vote

SolarCity made two announcements aiming to shore up its prospects to gain shareholder approval of its merger with Tesla. (Kris Tripplaar/Sipa USA/Newscom)

SolarCity (SCTY) stock, still trading below the value of Tesla's (TSLA) takeover offer, rose Wednesday after the company appointed a new CFO and announced a deal to create funds to finance more than $347 million in solar projects.

SolarCity stock rose 2.5% on the stock market today, closing at 20.48. It was the fifth straight up day for the stock, which nevertheless is down from 26.70 at the close on July 31, when Tesla and SolarCity announced their stock-swap merger agreement. Tesla will pay 0.11 share of its stock for each SolarCity share. Tesla closed Wednesday at 206.27, up a fraction, which values its offer near 22.69 a share. Tesla stock is down 12% since the SolarCity acquisition announcement.

Naming a new CFO is designed to show SolarCity management's confidence that shareholders will approve the Tesla acquisition, Needham analyst Y. Edwin Mok said in a research note Wednesday. Mok praised the additional financing but also pointed out that SolarCity must line up more financing to meet its goals. He maintained a hold rating on SolarCity stock.

On Wednesday, the No. 1 solar installer said it had partnered with Citi (C) on a fund to finance more than $284 million in U.S. residential solar projects and an additional $63 million fund for project for small and midsize businesses in California.

Separately, SolarCity announced it had promoted Radford Small to chief financial officer. He had been executive vice president of global capital, having joined the company last year after serving as chief operating officer for the Goldman Sachs (GS) clean technology and renewables group. At the same time, SolarCity said company President Tanguy Serra, who oversaw finance, would leave the company at year-end following the anticipated acquisition by Tesla. Serra is former CEO of SolarCity rival Vivint Solar (VSLR).

As the declines in the stocks show, Tesla's acquisition of SolarCity is far from a sure thing. While the companies have partnered in developing battery systems to store solar energy, buying SolarCity would put a lot more on Tesla's already busy plate. Tesla CEO Elon Musk has talked up the synergies the merger would bring. He also has recused himself from voting on the deal, which is significant because he is the No. 1 shareholder of each company (with about a 20% stake in each).

More than that, Musk is chairman of SolarCity, which was co-founded by his cousins, brothers Lyndon and Peter Rive. Lyndon is SolarCity CEO and Peter is its CTO.


IBD'S TAKE: The N in IBD's CAN SLIM investment system stands for New, and Elon Musk is a master of new. But even aside from his electric-car company Tesla and the solar energy company whose board he chairs, SolarCity, Musk has another big N in his arsenal: his SpaceX commercial space company and his hopes to lead the efforts to colonize Mars.