Pineapple Energy, a provider of solar power, battery storage systems and smart energy controls to households and small businesses, closed a $7.5 million debt deal with Decathlon Capital Partners, a revenue-based funding investor.
The transaction, which carries a 48-month term, is a straight debt instrument, thus avoiding any equity dilution. Debt service payments will begin at a smaller initial level and increase over the course of the loan in several step-ups, tracking the company’s revenue growth.
Pineapple Energy will use the funds as follows:
- $5 million to retire the short-term note issued in connection with the company’s SUNation acquisition
- $1.5 million to retire other debt
- $1 million remaining for working capital as needed
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“After careful consideration of all available financing options, the terms negotiated with Decathlon were the most favorable for the PEGY shareholders,” Eric Ingvaldson, CFO of Pineapple Energy, said. “We took advantage of our ability to issue senior secured debt to retire certain obligations and to refinance other obligations over a four-year term. Most importantly, we resolved short-term liquidity concerns resulting from the SUNation acquisition and related short-term note due in August. SUNation is now fully a part of Pineapple, and we are acting with urgency to fully integrate the business and realize synergies on both the revenue and expense sides. This funding round wouldn’t have been possible without our relentless focus on execution and operational excellence as demonstrated by our achieving positive cash flow from operations in Q1. We will continue to run the businesses aggressively and with financial discipline.”
“This is a huge milestone for Pineapple, and I want to say thank you to our new financing partners at Decathlon and to our employees for all their hard work in getting this across the finish line,” Kyle Udseth, CEO of Pineapple Energy, said. “With this debt funding round, we can move the company forward without taking equity dilution, which has been a primary focus of ours with residential solar valuations so irrationally low. We’ll keep our eye on the ball of helping homeowners go solar, driving top-line revenue growth and bottom-line profitability, and we’re confident that high-quality and sustainable companies that strive to deliver a great customer experience will be rewarded over time. We believe this funding round validates our strategy and our leadership team’s ability to execute, and we appreciate the confidence that Decathlon has shown in us here.”
