Tuesday, October 21, 2008

Evergreen Solar files breach of contract lawuit against Lehman Bros. and Barclays

By Mass High Tech Staff

Marlborough-based solar panel manufacturer Evergreen Solar Inc. has filed suit in the United States Bankruptcy Court for the Southern District Court of New York against Barclays PLC, Lehman Brothers Holdings Inc. and affiliated entities in an effort to recover 30.9 million loaned shares of the company.

The shares of common stock in question were originally loaned to Lehman Brothers in connection with a $375 million financing Evergreen Solar (Nasdaq: ESLR) completed in July 2008. Following the bankruptcy of Lehman brothers in both the U.S. and England, the shares were not immediately returned to Evergreen Solar, as required by the original contract, according to executives. In addition, 12.2 million shares were obtained by Barclays, a transaction executives at Evergreen said Lehman Brothers had no authority to make under the original agreement.

According to an announcement today, Evergreen Solar is seeking to ultimately recover all of the 30.9 million loaned shares and has specifically demanded Barclays immediately return the approximately 12.2 million shares it obtained from Lehman Brothers. Pending a decision by the court regarding the return of the shares, Evergreen Solar has asked the court to prevent further transfer of the shares held by Barclays.

In a statement, Evergreen Solar CFO Michael El-Hillow said executives at the company are “outraged” that Lehman Brothers would disregard its obligations under the agreement and transfer the shares to Barclays. In addition, executives at Evergreen Solar reported the company made “repeated demands” for the shares to both Barclays and Lehman Brothers, with no result.

Barclays, according to the Evergreen Solar statement, has refused to return the shares or to indicate any willingness to work with the company as an investment banker.

Evergreen Solar originally made the transaction to finance the completion of a new manufacturing facility in Devens, which opened in June, as well as initiate the construction of a second facility at the same location.

Evergreen Solar reported $22.8 million in revenue in the second quarter of 2008, with a net loss of $8.9 million.