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Complete Solaria Signs Term Sheet to Eliminate Carlyle Debt

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Complete Solaria (NASDAQ: CSLR) announced a significant financial restructuring with Carlyle, eliminating its debt obligations to the private equity firm in exchange for a third-party cash payment. CEO T.J. Rodgers stated that this move replaces the Carlyle debt with a $10 million loan from a new provider offering more favorable terms. Additionally, Kline Hill will convert its debt to 9.8 million shares of common stock, effectively reducing the company's overall debt by $56 million. This restructuring aims to improve Complete Solaria's equity value and pave the way for resumed growth and profitability.

Positive
  • Complete Solaria eliminates $66 million in private equity debt.
  • Replacement of Carlyle debt with a $10 million loan offering more favorable repayment terms.
  • Kline Hill's debt converted into 9.8 million shares of common stock, reducing debt burden.
  • Reduction of overall debt by $56 million.
  • Improved capitalization structure aims to enhance equity value and support growth and profitability.
Negative
  • Issuance of 9.8 million new shares could lead to shareholder dilution.
  • The final terms of the new $10 million debt are still subject to negotiation.
  • The company remains reliant on debt financing, albeit at a reduced level.

Complete Solaria's agreement with Carlyle to eliminate $66 million in private equity debt is a significant move. By swapping this debt for 9.8 million shares and $10 million in new debt with more favorable terms, the company reduces its overall debt burden by $56 million. This restructuring can improve liquidity and offers the company greater flexibility in raising capital moving forward.

In the short term, this is positive as it reduces interest payments and alleviates restrictive covenants that could have hampered operational decisions. Long-term, the dilution from issuing new shares needs to be weighed against the benefits of a lighter debt load. Shareholders should assess if the improved financial structure propels the company towards sustained growth and profitability as stated by the CEO.

The strategic restructuring of Complete Solaria's debt is likely to appeal to the market. The transfer of debt obligations from Carlyle to a new lender with less restrictive covenants is expected to enhance investor sentiment. This change can provide the company with a more stable foundation to pursue growth opportunities and improve market perception.

However, the issuance of 9.8 million new shares will dilute existing shareholders' equity, which can be a concern. Despite this, the overall reduction in debt enhances the company's financial stability, potentially leading to an increase in stock price as investor confidence grows.

FREMONT, Calif., May 15, 2024 (GLOBE NEWSWIRE) -- Complete Solaria, Inc. (“Complete Solaria” or the “Company”) (NASDAQ: CSLR) today announced that a significant Complete Solaria private equity debt holder, Carlyle, has agreed to release the Company from its debt obligations in return for a third-party cash payment.

T.J. Rodgers, Complete Solaria’s Chief Executive Officer said, “The Carlyle debt, which has prevented the Company from raising money in the market, will be replaced with $10 million in debt from another debt provider that offers balloon payback structures without unduly restrictive operational covenants. The deal has been made in principle, and is subject to negotiations over terms and conditions in the final contract.

Rodgers added, “In a prior press release I stated, ‘[Private equity provider] Kline Hill has agreed to convert its outstanding debt to 9.8 million shares of Common Stock contingent upon the Company’s reaching an agreement with its other [big] outstanding lender, Carlyle…’ That has been achieved. Now, the full $66 million of our combined private equity debt will be replaced with 9.8 million newly issued shares and $10 million in debt from a new lender, reducing the Company’s debt load by $56 million and, in theory, increasing our equity value by the same amount.

Rodgers concluded, “Our capitalization structure has now been reworked, giving us a clear line of sight to resume growth, achieve profitability, and bring value to our shareholders.”

About Complete Solaria

Complete Solaria is a solar company with unique technology and end-to-end customer offering, which includes financing, project fulfilment and customer service. Complete Solaria’s digital platform together with premium solar products enable one-stop service for clean energy needs for customers wishing to make the transition to a more energy-efficient lifestyle. For more information visit www.CompleteSolaria.com and follow us on LinkedIn.

Forward Looking Statements 
This press release may contain certain forward-looking statements within the meaning of the federal securities laws with respect to the referenced transactions. These forward-looking statements generally are identified by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” and similar expressions, but the absence of these words does not mean that a statement is not a forward-looking statement. Forward-looking statements are forecasts, predictions, projections and other statements about future events that are based on current expectations, hopes, beliefs, intentions, strategies and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) risks that the sale of certain assets and other business items will not be completed on the terms set forth in the Asset Purchase Agreement or the ancillary agreements referenced in the Asset Purchase Agreement, if at all; (ii) the sale of assets disrupts current plans and operations of the companies or diverts managements’ attention from Complete Solaria’s business operations; (iii) the outcome of any legal proceedings that may be instituted in connection with the assets sale; (iv) the price of Complete Solaria’s securities may be volatile due to a variety of factors, including changes in the applicable competitive or regulatory landscapes, variations in operating performance across competitors, changes in laws and regulations affecting Complete Solaria’s business, and changes in the combined capital structure; (v) the ability to implement business plans, forecasts, and other expectations after the completion of the business combination, and identify and realize additional opportunities; (vi) the evolution of the markets in which Complete Solaria will compete.

The foregoing list of factors is not exhaustive. Readers should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the registration statement on Form S-4 filed, which was declared effective by the Securities and Exchange Commission (the “SEC”) on June 30, 2023. Such filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Complete Solaria assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

For investor inquiries, please contact:
Complete Solaria, Inc.
Marc P. Griffin
Phone: +1 (646) 277-1290
CompleteSolariaIR@icrinc.com

Source: Complete Solaria, Inc.


FAQ

What is the impact of Complete Solaria's agreement with Carlyle on its debt?

The agreement eliminates $66 million in debt, replacing it with a $10 million loan, thus reducing overall debt by $56 million.

How will Complete Solaria's debt restructuring affect its equity value?

The restructuring is expected to increase Complete Solaria's equity value by reducing its debt burden by $56 million.

What are the terms of the new $10 million debt for Complete Solaria (CSLR)?

The new $10 million debt offers a balloon payment structure with fewer operational restrictions, although final terms are still under negotiation.

How many new shares will Complete Solaria issue as part of its debt conversion?

Complete Solaria will issue 9.8 million new shares of common stock as part of the debt conversion with Kline Hill.

What is the date of the Complete Solaria press release about eliminating Carlyle debt?

The press release was issued on May 15, 2024.

Complete Solaria, Inc.

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