Principal Solar gets $15 million to support purchase of solar power plants
Principal Solar, Inc (PSI; OTC Pink: PSWW) a renewable energy holding company, said it received $15 million in reserve equity financing from AGS Capital Group, LLC to support the company’s purchase of solar power plants. The company already has purchased some plants and plans to continue purchasing larger projects.
The company will use the financing to support legal and other cash expenses as the company pursues purchases, according to Principal Solar CEO Michael Gorton. It’s the third round of financing for the company, but it is a much larger round of financing for the company.
The company has already acquired three projects and has more in the works.
“We are just focused on generating facilities that have long-term power-purchase agreements,” Gorton said. “Our primary interest today is acquisition using 144k stock transactions.”
By converting the companies into stock, and allowing that stock to grow in value, companies acquired by Principal Solar can generate more income rather than in an outright cash purchase.
The company has a roll-up strategy to making purchases, according to Gorton.
“We start small, and each acquisition we look at is bigger or has something we want,” he said.
Sometimes, however, the company may look at purchases that are smaller or equal in size to its most recent purchase.
“There are some that have assets we’re interested in, like the management team or other pieces of value,” he said.
Other pieces of value include a broad swath of possibilities. They could include entrance into a market, working with a new power-purchase agreement customer, a project developer or building owner the company wants to work with.
“There’s about a dozen different motivators,” Gorton said.
The company is now looking for projects in range of hundreds of kilowatts to tens of megawatts. But under the company’s business model that will change quickly.
“Six months from now, I’m not going to be interested in a 100-kilowatt system. I’ll be interested in a 50-megawatt to 100-megawatt facility,” Gorton said.
Image courtesy of NREL.
