SolarCity plans $500 million five-year convertibles to yield 1.125%-1.625%, up 32.5%-37.5%

By Rebecca Melvin

New York, Sept. 23 – SolarCity Corp. plans to price $500 million of five-year convertible senior notes after the market close Wednesday that were talked to yield 1.125% to 1.625% with an initial conversion premium of 32.5% to 37.5%, according to a market source.

The Rule 144A deal has a $75 million greenshoe and was being sold via joint bookrunners Goldman Sachs & Co., BofA Merrill Lynch and Credit Suisse Securities (USA) LLC.

Co-managers are Barclays and Deutsche Bank Securities Inc.

SolarCity has an existing $230 million convertible issue with a 2.75% coupon due 2018 that was priced in October 2013.

The new notes are non-callable for life, with no puts. There is dividend and takeover protection, and the bonds will be physically settled.

In connection with the offering, the company plans to enter into capped call transactions with one or more counterparties.

A portion of the proceeds will be used to pay the cost of the capped call transactions, with remaining proceeds for general corporate purposes, which includes working capital, capital expenditures and potential acquisitions.

SolarCity is a San Mateo, Calif., provider of clean distributed energy.

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