Evergreen Solar starts exchange offer for 4% and 13% convertibles

By Jennifer Chiou

New York, Dec. 6 - Evergreen Solar, Inc. announced the start of an exchange offer involving up to $200 million of its 4% senior convertible notes due 2013 and all $165 million of its 13% convertible senior secured notes.

The company registered in an S-4 with the Securities and Exchange Commission $100 million of new 4% convertible subordinated additional cash notes due 2020 to be issued in exchange for the existing 4% notes as well as $165 million of new 7.5% convertible senior notes due 2017 to be exchanged for the 13% notes.

The amount of new 4% notes to be issued in exchange for the existing 4% notes will be determined via a modified Dutch auction. Holders must submit tenders in the range of $425 to $500 principal amount of new 4% notes that will be issued for each $1,000 principal amount of existing 4% notes.

Evergreen is offering an equal amount of new 7.5% notes for the 13% notes that are tendered for exchange.

According to a company release, both the new 4% notes and the new 7.5% notes contain terms and features that should provide greater incentive to holders to convert their notes into shares of Evergreen Solar's common stock more quickly than the existing notes series.

The conversion price for the new 4% notes will be $1.00, and the conversion price for the 7.5% notes will be 120% of the average of the daily volume-weighted average price of the company's stock for the five trading days ending on the second day prior to the offer expiration, subject to a floor of $0.75 and a cap of $1.25.

The conversion price is $12.11 for the existing 4% notes and $1.90 for the 13% notes.

In addition, the company is soliciting consents to adopt proposed amendments to the indenture governing the 13% notes, which will release the security interest and all of the collateral, terminate the existing collateral documents and eliminate many of the restrictive covenants and certain events of default.

The company has yet to fix the consent deadline and offer deadline.

Evergreen said that the offer is part of its comprehensive recapitalization plan to align the company's capital structure with its current business model. The plan received board approval on Monday.

The company said that it will also look to raise additional capital by selling up to $40 million of the new 4% notes. It also plans to implement a 1-for-6 reverse stock split approved by stockholders on July 27.

Stockholders will be asked to vote on the recapitalization plan.

Lazard Capital Markets LLC (212 632-1960) is the dealer manager for the exchange offer.

Evergreen Solar makes solar power products and is based in Marlboro, Mass.

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