Vivint Solar raises US$545m to boost liquidity amid talk of Q2 slowdown

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Image credit: Vivint Solar

Vivint Solar has secured a hundred-million-dollar liquidity boost in the midst of a quarter where it expects a temporary stalling of installations, enlisting an asset management giant as sponsor.

On Tuesday, the firm said it has tapped existing and new facilities to line up US$545 million of fresh debt, in a bid to strengthen its finances against the COVID-19 headwinds that have dampened growth prospects for US residential solar players.

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According to Vivint Solar’s statement, the US$545 million capital boost includes a new US$300 million hold-co loan facility. The package, featuring an 8% interest rate and set to mature in three years, was supplied by a credit fund run by financier Brookfield Asset Management.

In addition, the residential specialist is raising an extra US$245 million by beefing up a pre-existing revolving warehouse facility, provided by various lenders. Boosted now with the US$245 million, the facility now boasts total commitments of US$570 million.

The trust from investors – including new relationship Brookfield – underscore Vivint Solar’s “ability to access capital markets” at the time of COVID-19, said Thomas Plagemann, the firm’s chief commercial officer and head of capital markets.

“Given the continued uncertainty in the capital markets, we feel the approach we have taken provides an excellent combination of all-in cost of capital and advance rate, with flexibility to access the securitization markets as they fully recover,” Plagemann added.

Digital shift pays off amid hopes for Q3 rebound

Vivint Solar’s debt injection comes as the firm nears the end of a quarter where installs are expected to stall, even if temporarily.

In forecasts that echoed those by SunPower and Sunrun, the firm said in mid-May it expects its buoyant roll-out rates of Q1 2020 (56MW) to slip in Q2 2020 (35-38MW). Should it materialise, the Q2 2020 prediction would see installs drop to levels not recorded since at least 2017.

Based on statements to analysts, Vivint Solar does not believe the slowdown will extend to Q3 2020. “We're seeing good signs,” CFO Dana Russell said at a conference call after the Q1 2020 results. “But it's a little early to tell in terms of what the possibilities are.”

The talk of a rebound echoes expert predictions for the US residential segment more broadly. As reported by PV Tech, a webinar arranged by investment bank Roth Capital noted sales have already returned to February 2020 levels, amid claims that a V-shaped recovery is possible.

Vivint Solar’s Q1 2020 update showed its revenues surged 31% year-on-year to reach US$91.2 million, while gross profit climbed 37% to US$16.3 million. Overall, however, the firm remained in the red, posting Q1 2020 losses of US$40.3 million.

Like Sunrun and other residential players, Vivint Solar has ramped up its shift to online sales in the wake of the COVID-19 pandemic. In mid-May, CEO David Bywater said the transition has already yielded results, with April as a “banner month” for digital leads.

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