August 16, 2011 | 0 Comments
Evergreen Solar has begun restructuring after filing for Chapter 11 with the US Bankruptcy Court. Evergreen will shut down its MI operations and reduce staff, selling off assets including its String Ribbon solar cell technology.
August 16, 2011 - BUSINESS WIRE -- Evergreen Solar, Inc. (NasdaqCM: ESLR), String Ribbon solar manufacturer, voluntarily filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code. The petition was filed in the U.S. Bankruptcy Court for the District of Delaware.
In conjunction with the Chapter 11 filing, Evergreen Solar will restructure with certain holders of more than 70% of the outstanding principal amount of its 13% Convertible Senior Secured Notes, or the supporting noteholders. Top creditors for Evergreen Solar include U.S. Bancorp (NYSE:USB) and MassDevelopment.
Evergreen's shares tumbled 57% to close at the dismal $0.18 per share on Monday, reports contributor Ucilia Wang.
The restructuring agreement will see sales of ESLR's assets (Bankruptcy Code section 363), including its String Ribbon wafer technology. The plan will need court approval and will be financed by noteholders.
Evergreen Solar's president and CEO Michael El-Hillow expects the company to "continue...technology development without interruption during Chapter 11 and the sale process." He notes that Evergreen has been trying to reposition itself since January, when it closed a much-subsidized Devens, MA, solar fab.
Further cuts just announced include a 65-employee workforce reduction in the US and Europe, which will shutter ESLR's Midland, MI filament facility.
ESLR will maintain its Wuhan, China, manufacturing business "depending on market demands," and will discuss operational and financing changes with stakeholders there.
Going forward, ESLR will have 50 people supporting development, 10 people in administration as well as 25 people supporting industry standard wafer development in Wuhan, China.
"While Evergreen worked on its new manufacturing strategy, many of its peers, particularly those in China, were able to line up financing and build new factories. Silicon solar panel prices have fallen by more than 50 percent in the past two years, and the pressure to cut costs continues to be intense this year as supply outstrips demand," notes Wang. Read her analysis of other China-based solar business plans here.
As part of the restructuring, an entity formed by the supporting noteholders, ES Purchaser, LLC, entered into an asset purchase agreement with ESLR. ES Purchaser will serve as a "stalking-horse" and provide a "credit-bid" pursuant to the Bankruptcy Code for assets being sold. If higher or better offers for assets are not obtained, it is expected that most of the Company?s assets will be acquired by ES Purchaser pursuant to the asset purchase agreement. The asset purchase agreement for the 363 sale is subject to Bankruptcy Court approval and other customary closing conditions. The Company has the requisite funding in hand to operate in Chapter 11 and will continue to operate but with additional operational changes necessary to continue to reduce expenses.
Based upon the estimated value of ESLR's assets, the assets are expected to be insufficient to satisfy all its obligations to its creditors. Accordingly, it is expected that no distributions will be made to holders of common stock and the common stock will be extinguished upon consummation of the Chapter 11 plan.
Evergreen Solar, Inc. develops, manufactures and markets String Ribbon solar power products using its proprietary, low-cost silicon wafer technology. Learn more at www.evergreensolar.com
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