Eldrive’s Post

Complete Solaria Eliminates $67.6 Million of Private Equity Debt LEHI, Utah, July 01, 2024 (GLOBE NEWSWIRE) -- Complete Solaria, Inc. (“Complete Solaria” or the “Company”) (Nasdaq: CSLR), a leading solar technology, services, and installation company, today announced that it had cancelled $67.6 million in debt from its balance sheet and been released from its obligations under that debt by its two private equity (PE) providers, Carlyle and Kline Hill Partners. On May 15, 2024, the Company announced that it had signed an agreement with Carlyle to set aside all of its financial claims in return for $10 million in cash. Today, we announce an equivalent deal with Kline Hill Partners for $8 million. On June 17, 2024, the Company announced that T.J. Rodgers had funded the $10 million payment to Carlyle by purchasing a convertible debenture security from the Company through Cantor Fitzgerald & Company. Today, we announce that the investment by T.J. Rodgers has been increased from $10 million to $18 million to fund both private equity settlement deals. Complete Solaria CEO, T.J. Rodgers concluded, “The reason for this press release is to announce that Complete Solaria is free of all of its prior private equity debt obligations, and that we have eliminated $67.6 million of long-term debt from our balance sheet.” Rodgers added, “When I drafted the press release above last week, I expected that the Company would exit that deal short on cash because the entire $18 million invested in the Company would be consumed in cash settlements. The latest good news is that on closing day, Sunday, June 30, after our private equity partners had studied the Company’s investor-friendly convertible debenture offering – which featured a 12% coupon and 50% conversion premium ($1.68 strike price) with no covenants or securitization terms – both of them found the convertible debenture terms compelling and agreed to re-invest the $18 million payment due them back into the Company. This means that my investment in the convertible debenture will cycle through the Company twice, once to pay off the private equity partners and once again to provide $18 million in new working capital.” Rodgers concluded, “I would like to thank Andrew Kapp of Carlyle and Rick Orlando and CEO Mike Bego of Kline Hill Partners for their support, and Andrew Apthorpe of Cantor for his skill in developing the convertible debenture vehicle.”

If you or your clients are looking at Private Debt structuring, check out our latest update and get in touch with the #VistraCapitalMarkets team to see how we can help.

Venture into the realm of debt fundraising with a clear roadmap: a16z demystifies the process that steer founders toward an optimal funding pathway in the turbulent financial landscape. A must-read for those eyeing debt as leverage! #DebtFundraising #StartupFinance"

The H1 2023 Global Private Debt Report is now live on the PitchBook Platform. This semi-annual publication pulls together high-level data and insights that both PitchBook and LCD have to offer on private debt in a single read, including fundraising, fund performance, notable deals, origination volumes, and share of LBO funding relative to traditional markets. Key takeaways from this quarter’s report: - Private debt is now the highest fundraising strategy among all private capital strategies, second only to private equity. The $91.4B raised in H1 2023 is ahead of last year and we are tracking above $200B for the fourth consecutive year. - Not included in that total is another $16.6B in retail fundraising for non-traded BDCs, interval funds and tender offer funds. These new structures have allowed private debt sponsors to gather an additional $250B in AUMs from the retail channel over the last three years. The total AUM in private debt exceeds $1.75T inclusive of these retail AUMs. - Following a stellar year in 2022 when private debt outperformed private equity and all other private capital strategies with the exception of real estate and real assets, the year is off to a strong start with floating rate loans outperforming bonds by a wide margin. The Morningstar LSTA bellwether index is up 10.4% through September 22. That compares to +6.3% on high yield bonds, the next best performer in the US fixed income.

PIK for our PE   When I talk about the characteristics of PIK (Payment-in-Kind) debt during our corporate funding courses, participants always seemed amazed, and cringe, at the concept of PIK, which is basically a debt instrument in which interest is capitalised instead of paid, thereby increasing the capital of the outstanding loan over time.  “That sounds crazy”, “How do banks even allow such” are some of the common outbursts. The gasps get even louder when I talk about the PIK toggle (Pay-If-You-Want). I, of course, try to defend the use of PIK debt as useful instrument to use when one needs to ease the interest burden on a company, particular in leveraged Buy Out (LBO) situations. Because of the increasing debt burden, the key consideration, when resorting to PIK, is to have a clear prospect of a significant deleveraging event through a ramp up of operational cashflows, assets sales or a take-out event such as the sale of the company or a listing via an IPO (Initial Public Offering).  If this does not happen as expected, then, of course, the debt burden can become crippling, if not fatal. I know this from bitter experience. As a Banker I was involved on the Bain LBO of South Africa’s Edcon (at the time the largest department store in Africa). As one IPO after the other was shelved due to less than ideal IPO market conditions, the funding Banks had to load more debt - particular PIK debt in order to spare the company the interest servicing burden - while we all waited for the IPO market to turn. It never did. The end result was an unmanageable debt pile, eventually resulting in debt-to-equity swaps for the Banks and the ultimate break up and sale of the company. If anyone ever wanted to write a book about LBOs gone wrong, Edcon would make a great case study. I’m sure it would be a Best Seller, with Pik debt playing a starring role.  I therefore read with interest that PIK debt is now becoming the flavour of the day as far as LBOs are concerned. Driven by current high interest rates, PE companies, especially, are increasingly pushing their funders to structure PIK debt for their deals and it would appear that the Banks are eager to please. Even my old crowd, JPMorgan is now actively pushing for the use of PIK to become common in leveraged finance.   It's probably a good thing that I have hung up my Corporate & Investment Banking gloves as the PTSD from my last high leverage, PIK laden deal, would probably have made me a real wet blanket during the current PIK frenzy. So, how will it all end up? I’m sure that some deals will do well with well structured PIK instruments and a properly assessed exit, but I fear that others will go the Edcon way and in a few years there will be a few more Bankers joining me with similar PIK related PTSD. Frank Vein, Managing Director - Future Capital www.futurcapitral.global #lbo #privateequity #PIK #leveragedfinance

Private debt is simply the lending of money to a private entity - these may be public or private companies that need financing to fund growth, optimize their balance sheet, refinance existing debt, or perform a strategic acquisition. Learn more about investing in Private Debt #privatedebt #investing #finacialplanning

Elevating Your Company’s Valuation: The Power of Non-Dilutive Debt Financing -

“Don’t use too much, but don’t use none.” 👀 “Founders in Australia and New Zealand often have a negative view of debt, but if you are in the right position, you should actually be using debt to accelerate your business,” says Matt Allen, Co-Founder and Head of Capital & New Markets here at 🚜. We chat with founders, companies, and partners regularly about their views on debt financing. Recently, these conversations have become even more frequent due to today’s challenging macroeconomic environment. The consensus? There's a lot of nuance in choosing between equity and debt, often boiling down to managing risk. Experienced journalist Stian Overdahl (our new awesome addition to the team at Tractor), sat down with Matta to explore how founders can leverage debt to fuel growth in these uncertain times. For startups, mastering the art of scaling is all about balancing challenges and opportunities. One key opportunity? Knowing when and how to leverage external capital. With interest rates where they are right now, it's more crucial than ever to consider the cost of capital. While debt might seem expensive, the potential to preserve equity and strategically time growth investments can outweigh the costs. Matta highlights, “The challenge for founders is to reach revenue milestones without dilution. Debt financing is often the unsung hero in this equation." Check out Stian’s chat with Matta on debt vs equity, and how leveraging external capital (like debt) can be a game-changer - https://lnkd.in/gQadnQzp 🚀

What's your view on startups using debt wisely? Let's break this financial strategy, highlighting its essence, challenges and benefits 🚀. debt financing is about borrowing funds to fuel business operations and growth. Opting for debt means facing real challenges, including: The burden of interest costs, which can eat into profitability. 💸 Stringent repayment schedules, potentially straining cash flows during tough times. ⏳ The risk of losing assets or facing bankruptcy if unable to meet repayment obligations. 🏦 Restrictions like limits on further borrowing or dividend payouts, imposed by lenders. 🔒 Despite these hurdles, the strategic use of debt often brings significant benefits: It provides a runway for expansion without diluting ownership stakes. 📈 Offers tax advantages, since interest payments are tax-deductible, lowering overall tax bills. 🧾 Enables businesses to leverage capital for higher returns. 💰 Offers flexibility in terms of amount and duration, allowing businesses to tailor financing to specific needs. 🔄 The key is leveraging others' money to generate more income than the debt costs. Businesses must carefully evaluate their capacity to manage debt under different scenarios, ensuring it aligns with their strategic objectives and financial health. Share your insights, and don't forget to pass this conversation on to others who might benefit from it or have something to add. #fundmanagement #debt #debtmanagement #finance #financialmanagement #loan