Capstone Turbine (CPST) Enters $50M Financing Agreement with Sky Solar (SKYS)

October 6, 2016 8:34 AM EDT

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Capstone Turbine Corporation (Nasdaq: CPST) announced that it has entered into a strategic financing relationship agreement with Sky Solar Holdings, Ltd. (Nasdaq: SKYS) and Sky Capital America, Inc., a Sky Solar subsidiary (together, “Sky Group”) to provide funding to Capstone Turbine’s Capstone Energy Finance (“CEF”) joint venture.

Pursuant to the strategic financing agreement, Capstone and CEF granted a right of first refusal (“ROFR”) to Sky Group to provide funding of up to $50 million, which may be extended by an additional $100 million (the “Project Fund”) at Sky Group’s sole discretion for various CEF projects on a global basis after Capstone and CEF have exhausted their internal funding sources of up to $25 million. The ROFR also includes an option for Sky Group to jointly fund power purchase agreement (“PPA”) backed opportunities with Capstone, CEF, end use customers, and/or any authorized Capstone distributors under certain mutually agreeable conditions. The agreement will expire at the earlier of the end of three years following the effective date or upon the exhaustion of Sky Group’s Project Fund.

“Capstone’s new finance subsidiary has developed a twenty million dollar pipeline of well-qualified projects since its launch last December, and we expect to quickly surpass our ability to fund projects with our internal resources,” said Darren Jamison, Capstone's President and Chief Executive Officer. “We have looked at several potential partners and, after months of due diligence and discussions with several companies, we have selected Sky Solar because we believe they have the right skill set, ability, experience and global reach to help us successfully grow our Capstone Energy Finance business over the next three years,” added Mr. Jamison.

“As we have highlighted in the past, we remain focused on expanding our power market portfolio by selectively pursuing non-solar renewable asset classes that can generate returns higher than typical solar projects, and we expect this new strategic partnership with Capstone will provide an attractive avenue for additional growth,” said Sanjay Shrestha, Sky Solar Chief Investment Officer and President of Sky Capital America.

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