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Related Party Transactions
9 Months Ended
Sep. 30, 2013
Related Party Transactions

3. Related Party Transactions

Under Intercorporate Services and Industrial Building Lease Agreements, in the ordinary course of business, we have billed and collected charges at least quarterly for services performed and facilities utilized by Real Goods Solar, Inc. (“Real Goods Solar” or “RSOL”). At RSOL’s request, we ceased performing services for RSOL after September 30, 2013 and the Intercorporate Services Agreement terminates on December 19, 2013.

On May 28, 2013, we sold in the public market 6,017,500 shares of our investment in Real Goods Solar Class A common stock for an average gross per share sale price of $2.7552 and total net proceeds and gain of approximately $16.4 million. Following this sale, our Chairman resigned as Chairman of RSOL’s board and, thus, we no longer had significant influence over Real Goods Solar. Therefore, we changed our accounting for our investment in RSOL from the equity to cost method. Due to this accounting method change, we will no longer report our portion of RSOL’s net earnings or losses each period. On September 13, 2013, we sold in the public market another 1,000,000 shares of RSOL for an average gross per share price of $2.00 and total net proceeds and gain of approximately $2.0 million.

At September 30, 2013, we had two subordinated loans receivable from Real Goods Solar with outstanding balances totaling $2.6 million, which bear interest at an annual rate of 10%. The present carrying value of these loans is zero. On March 27, 2013, the maturity dates for these loans were extended, with $1.0 million now due April 26, 2014 and $1.6 million due April 30, 2014. On April 23, 2013, we entered into a conversion agreement with Real Goods Solar pursuant to which the principal amount of the $1.7 million promissory note with Real Goods Solar dated March 27, 2013 was reduced by $0.1 million in exchange for 62,111 shares of Real Goods Solar’s Class A common stock. The conversion ratio was determined based on the closing market price of Real Goods Solar’s Class A common stock on the date of the conversion agreement. The $1.0 million loan includes certain customary language accelerating the maturity date upon the occurrence of certain events, such as RSOL’s insolvency or bankruptcy. Also, if RSOL completes a sale of at least $50,000 of its capital stock, then we have the option of converting all or any portion of the principal and interest owing on the loan into securities in such sale at the same purchase price as paid by other purchasers in such sale.

On November 5, 2013, we collected cash from Real Goods Solar of $2.3 million for the settlement of our two outstanding loans receivable from RSOL, less $0.2 million for our acquisition of RSOL’s tenant leasehold improvements made to our owned building in Colorado.

 

During the three month and nine months ended September 30, 2013, we collected loan interest from Real Goods Solar of $39 thousand and $125 thousand, which are reported in Interest and other expense, net on our condensed consolidated statements of operations for the three and nine months ended September 30, 2013.