7 ms·

I understand when he puts his money where his mouth is, but is it ok for him to fund one company with another when they're in different businesses and he's not

I understand when he puts his money where his mouth is, but is it ok for him to fund one company with another when they're in different businesses and he's not the only shareholder? I don't know all the details, but it seems a little strange.

abhi3 10y ago
He didn't fund company X using company Y's money. He funded company X by taking a personal loan by pledging his own shares in company Y.
- maxerickson 10y ago
  The article is quite clear about SpaceX buying bonds from SolarCity. edit: (It does also mention the large personal loans)
  - abhi3 10y ago
    The article lists out several unusual practices. Buying bonds was just one of them. The bond purchase would have been approved by the board which would have considered if it was a good investment, those details we do not have. Maybe they were tax exempt, highly rated, secured and carried higher interest?
    - nissimk 10y ago
      The bonds are great for investors because most of the the terms in there are designed to screw over the customer. These bonds are securitizations of SolarCity leased solar panel rooftop systems. The salesmane I met with in NY told me that was the only way I could get SolarCity panels installed at my home is if I signed the solar lease agreement (which would then be securitized into these bonds). The lease says that if you default on the lease, by missing a single payment, SolarCity has the right to take back the panels, but you are still liable for the remainder of the lease payments even though you no longer have the panels.
      - jacquesm 10y ago
        I'd be surprised if that held up in court.
        toomuchtodo 10y ago
        Holds up just fine if you default on a vehicle lease (repossession, you're on the hook for the remaining balance). Why would solar panels be different? Because its on your roof instead of in your garage?
      - maxerickson 10y ago
        Page 9 if anyone is interested: https://www.solarcity.com/sites/default/files/sc-contract-resi-lease-2.9.pdf https://www.solarcity.com/sites/default/files/sc-contract-re...
        droithomme 10y ago
        Hm, in section 16 you also have to pay them for all costs, and you still owe for the rest of the lease, plus compensation for loss of their investment tax credits. Default is also triggered if you sell the house, the person buying it assumes the lease, but later has his credit rating drop.
      - stardek 10y ago
        Does anyone know if there are cases of that being enforced? It sounds to me like the sort of thing that is thrown in by some overzealous lawyers just because they can. Still, definitely not a good thing to sign though.
forgetsusername 10y ago
>I don't know all the details, but it seems a little strange. If you follow TSLA, they play with their financials as well; unusual metrics, things vaguely reported, metrics disappearing. At best, it's risky. Personally, I think it's a tad shady. But around here it's fine, because it's Elon Musk not a banker.

abhi3 10y ago

He didn't fund company X using company Y's money. He funded company X by taking a personal loan by pledging his own shares in company Y.

maxerickson 10y ago
The article is quite clear about SpaceX buying bonds from SolarCity. edit: (It does also mention the large personal loans)
- abhi3 10y ago
  The article lists out several unusual practices. Buying bonds was just one of them. The bond purchase would have been approved by the board which would have considered if it was a good investment, those details we do not have. Maybe they were tax exempt, highly rated, secured and carried higher interest?
  - nissimk 10y ago
    The bonds are great for investors because most of the the terms in there are designed to screw over the customer. These bonds are securitizations of SolarCity leased solar panel rooftop systems. The salesmane I met with in NY told me that was the only way I could get SolarCity panels installed at my home is if I signed the solar lease agreement (which would then be securitized into these bonds). The lease says that if you default on the lease, by missing a single payment, SolarCity has the right to take back the panels, but you are still liable for the remainder of the lease payments even though you no longer have the panels.
    - jacquesm 10y ago
      I'd be surprised if that held up in court.
      - toomuchtodo 10y ago
        Holds up just fine if you default on a vehicle lease (repossession, you're on the hook for the remaining balance). Why would solar panels be different? Because its on your roof instead of in your garage?
    - maxerickson 10y ago
      Page 9 if anyone is interested: https://www.solarcity.com/sites/default/files/sc-contract-resi-lease-2.9.pdf https://www.solarcity.com/sites/default/files/sc-contract-re...
      - droithomme 10y ago
        Hm, in section 16 you also have to pay them for all costs, and you still owe for the rest of the lease, plus compensation for loss of their investment tax credits. Default is also triggered if you sell the house, the person buying it assumes the lease, but later has his credit rating drop.
    - stardek 10y ago
      Does anyone know if there are cases of that being enforced? It sounds to me like the sort of thing that is thrown in by some overzealous lawyers just because they can. Still, definitely not a good thing to sign though.

forgetsusername 10y ago

>I don't know all the details, but it seems a little strange. If you follow TSLA, they play with their financials as well; unusual metrics, things vaguely reported, metrics disappearing. At best, it's risky. Personally, I think it's a tad shady. But around here it's fine, because it's Elon Musk not a banker.