In late 2014, after two consecutive years of multi-million dollar profits and solid growth, Pristine Sun LLC lost a major incoming investment from a large U.S.-based energy company due to crashing oil prices. As a result, our corporate lender (who had lent us a peak amount of about $22 Million to support our growth of 400% per year in 2013 & 2014) demanded that we find an equity investor to counterbalance their loans. Prior the then, the company had grown with about $500,000 of equity invested by the founders (mostly me) and a $10 Million investment from Capital Dynamics in 2011. Due to strong profits, the CapDyn investment was repaid in full (with their 25% return) in 2013 & 2014, buying back the 40% share they had in Pristine Sun. The company "boot-strapped" its way to further growth in 2015 along with loans from the corporate lender based on about $80 Million of assets we had on the balance sheet by 2014.
Due to the oil price crash and the unexpected and spectacular implosion of the largest solar energy developer in the country (SunEdison), our CFO and executive team (me + five other C-level executives) struggled to find any investors for the company. For some reason, investors felt like low oil prices were bad for the solar industry. This is weird since we don't use oil to produce electricity in this country; it's a transportation fuel, not a power generating fuel like natural gas, coal or uranium. Nevertheless, all the 175 potential investors we spoke to, including those courted by an investment banking firm hired by our CFO, said no thanks the timing isn't right. But nearly all of them said they would buy our projects from us at a steep discount. That was not a sustainable business model since selling projects that were under development (but not yet in construction) at a big discount would be a short-term one-time cash infusion and then we'd have little left for our terrific employees to work on. That was a recipe for unwinding the company and laying off most (or all) of our staff. Meanwhile, our lender was threatening foreclosure if we didn't do something, and quickly. Our projects were at risk of having their contracts with customers (electric utilities) canceled due to non-payment of security deposits and lack of construction progress. Those projects were worth tens of millions of dollars once they became operational, so losing the contracts (which would kill the projects) would have been devastating. Our options were limited, and time was running out.
So in the summer of 2015, we signed what we thought was a very exciting Joint Venture with a Chinese-based publicly traded but financially awkward solar panel manufacturer, Renesola (NYSE: SOL). This is public information, and has been disclosed in the SOL public filings. Nothing noted here is non-public information. The announced JV called for 300 MW of solar projects (about 5% of the Pristine Sun "pipeline" of projects in development at the time) to be developed and built by Pristine Sun and sold to the JV. The value (at that time) of typical solar projects was about $2 Million per MW, so the total JV represented up to about $600 Million worth of future revenue to Pristine Sun. And, a significant infusion of cash would come at the time of the signing of the JV. We were cut off by our corporate lender and had no idea how to meet payroll for our 78 employees. So we were effectively left with no choice but to sign the JV agreement after our law firm had won a few hard-fought concessions from Renesola's counsel. It was not a fair agreement yet, but we really had no choice; we were out of time. We had to save our projects, and pay our team. So we signed, got the money at closing, and saved our projects by paying security deposits to the utilities and starting construction. The JV agreement called for significant additional capital payments to us over the next several weeks and months, which we were counting on to pay our suppliers for solar panels and other equipment and pay our sub-contractors.
You know what happens next. We never got any more money from Renesola pursuant to the JV agreement, so both parties in the JV sued each other (the court case is public if you care to read it here). There are 3 sides to every story, but suffice it to say that our team was extremely unhappy with Renesola. We were being starved for cash, right at the time when we needed it to pay our people and our vendors and suppliers. It got so bad that we had to begin laying off employees in late 2015 and we sold all of our company trucks and construction equipment, along with selling the constructed projects to other buyers (not Renesola). We entered a period of very painful protracted litigation. Our biggest investor cut us off, our corporate lender had already cut us off and would not allow any other loans to come in, and the litigation with Renesola tied up our projects making them difficult to sell without affecting the active litigation. It was a very trying time for the five of us who were the executives of the company, as we struggled and tried everything we could think of to dig out of the hole. Finally, after letting the public reporting periods pass for public companies (where Renesola had to disclose the dispute with Pristine Sun), we agreed to mediation. I cannot discuss the terms of the settlement reached in Mediation in the spring of 2016 (and finalized that summer), but I can say it was very favorable to Pristine Sun and has caused our senior lender to be mostly paid off over a period of time. The settlement, along with the sale of several other divisions of the company, paid down about $100 Million of debt and other liabilities and caused the company to earn record profits in 2016 and 2017.
As a result of paying down so much debt and earning the record profits, we attracted some large institutional, US-based equity investors who have partnered with Pristine Sun to resume growth and development. As the 2nd largest shareholder, this has been painful for me too but the future looks very bright: we held onto about 85% of our massive pipeline of solar projects. This pipeline could be worth $10 Billion someday if we built all of the projects. We won't: some will encounter fatal flaws in permitting our grid interconnection challenges. But some portion of the projects will be developed and built, and I stand to gain a lot from helping to make that happen. However, my role now is a Board director and investor, rather than a full-time employee (my choice). This gives me more time to spend with my family and train as a 50-year-old (at the time of writing) ninja warrior.
Pristine Sun LLC came out of this dark chapter in the "Solar Coaster" a leaner, meaner company with almost no debt, a small but capable team, and finally a huge upside potential to monetize one of the largest solar project development pipelines in the country. Wish us luck!
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