Evergreen Solar gets court approval on cash collateral, bid procedure

By Jim Witters

Wilmington, Del., Sept. 6 - Evergreen Solar Inc. received approval Tuesday to use the cash collateral of its pre-bankruptcy secured noteholders to fund operations while the company is in bankruptcy and got the OK for its bid procedure proposal to auction substantially all the company's assets.

The rulings came during a hearing in U.S. Bankruptcy Court for the District of Delaware, during which the debtors also received approval of its proposed Key Employee Incentive Plan.

As previously reported, Evergreen entered into a restructuring support agreement with holders of more than 70% of the outstanding principal amount of its 13% convertible senior secured notes under which the supporting noteholders have agreed to implement the restructuring to be completed through one or more sales of the company's assets.

Evergreen said the assets to be sold include its String Ribbon wafer technology business assets.

As part of the restructuring, the company said ES Purchaser LLC, an entity formed by the supporting noteholders, has entered into an asset purchase agreement and will serve as the stalking horse bidder for the assets.

ES Purchaser will provide a credit bid for the assets being sold.

According to the bid procedures approved Tuesday, the assets will be sold in lots, and bidders can submit offers for one or all of the lots.

Under the asset purchase agreement, ES Purchaser's purchase price would be $60 million. Competing bids will be due on Oct. 26. The auction is scheduled for Nov. 1. And the sale hearing is scheduled for 9:30 a.m. ET on Nov. 4.

Bids at auction will be made in minimum increments of $500,000 per lot.

The core business that the secured noteholders are interested in is the proprietary Wide Wafer Technology, according to court documents.

During the hearing, Thomas Moers Mayer, representing the official committee of unsecured creditors, emphasized the need for rapid progress toward the sale of Evergreen's 75 megawatt generating plant in Wuhan, Hubei, China. He said the Chinese government is moving to seize the facility.

Mayer said the facility is the only Evergreen Solar asset not secured by the note holders and, therefore, represents the only hope that unsecured creditors will receive any recovery.

As for the cash collateral, the company's use is scheduled to run through Nov. 15, unless a Chapter 11 plan takes effect of the bankruptcy case is dismissed or converted before that expiration date.

Ronald J. Silverman, representing the debtors, said the company has budgeted $14.5 million in spending during the coming 13 weeks.

The Key Employee Incentive Plan approved Tuesday includes members of the debtor's existing senior management team who possess an "intimate knowledge of the business," and will be needed to operate the merging company, court documents stated.

Under the plan, those employees will receive aggregate payments equal to 5% of the gross cash proceeds of a third-party sale of the Wide Wafer assets, subject to a minimum aggregate of $1 million. No KElP will apply if the stalking horse bid prevails.

Individual awards vary from $75,000 to $350,000.

Evergreen Solar makes solar-power products and is based in Marlboro, Mass. The company filed for bankruptcy on Aug. 15. The Chapter 11 case number is 11-12590.

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