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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.
by abhi3 11y 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 11y agoThe article is quite clear about SpaceX buying bonds from SolarCity. edit: (It does also mention the large personal loans)
- abhi3 11y agoThe 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 11y agoThe 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 11y agoI'd be surprised if that held up in court.
- toomuchtodo 11y agoHolds 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 11y agoPage 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 11y agoHm, 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 11y agoDoes 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.