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Evergreen Solar Inc. said its board has approved a recapitalization plan that would reduce its debt and interest expenses, raise capital and implement a reverse stock split.
Evergreen (Nasdaq: ESLR), a maker of solar wafers, cells and panels, said the plan would exchange a large portion of existing convertible debt for new debt with longer maturities and lower conversion prices, and would provide more incentive for convertible debt holders to convert notes into company stock.
The Marlborough-based firm said the plan aims to “align the company’s capital structure with its current business model” and “better position Evergreen Solar for future growth.”
Evergreen has faced stiff competition in the market for solar power products, particularly from Chinese manufacturers. The company is working to shift its panel assembly operation from Devens to a plant in Wuhan, China, as a way to cut costs. The company expects the transition to be complete by mid- to late-2011.
Evergreen intends to seek shareholder approval for the recapitalization plan at a special meeting early next year. The company warned that if stockholders reject the plan, executives will have to consider all other viable alternatives, which “may not be on terms as favorable to its stockholders as the recapitalization plan.”
As part of the plan, Evergreen aims to raise capital by selling up to $40 million of the company’s new 4 percent convertible subordinated additional cash notes due in 2020.
The company also intends to boost its share price by implementing the 1-for-6 reverse stock split that won stockholder approval last July. Evergreen shares closed at 84 cents on Monday.
The reverse split will take effect at the close of the convertible debt exchange offers, and will reduce the company’s common stock from 450 million to 120 million.
Evergreen said it then plans to increase the number of authorized shares in the company to 240 million, “in order to ensure that the company has sufficient shares available for future issuances.”
The company said that if the company’s stockholders fail to approve the proposed increase in authorized shares of the stock, the company may still choose to complete the exchange offers. Evergreen is offering to exchange its new 4 percent convertible subordinated additional cash notes due 2020 for up to $200 million of its existing 4 percent senior convertible notes. Evergreen is also offering to exchange its new 7.5 percent convertible senior notes due 2017 for all of its existing 13 percent convertible senior secured notes.
Lazard Capital Markets LLC will serve as the dealer manager for the exchange offers and bookrunner for the new money offering.
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