Evergreen extends exchange offers for 4%, 13% convertibles to Feb. 11

By Melissa Kory

Cleveland, Feb. 10 - Evergreen Solar, Inc. extended the exchange offers for its 4% senior convertible notes due 2013 and its 13% convertible senior secured notes due 2015, according to a company news release.

The expiration date and consent solicitation were extended to 5 p.m. ET on Feb. 11 from 11:59 p.m. ET on Feb. 9, an extension from the original Jan. 31 deadline. The offers began Jan. 3.

Evergreen is offering up to $100 million of new 4% convertible subordinated additional cash notes due 2020 in exchange for up to $200 million of the existing 4% convertibles via a modified Dutch auction.

The exchange offer for the 4% convertibles was amended on Jan. 27 to reduce the initial conversion price of the new 4% convertibles to $4.35 per share from $6.00.

The company is offering new 7.5% convertible senior notes due 2017 in exchange for up to $165 million of 13% convertibles on a par-for-par basis.

As of 11:59 p.m. ET on Feb. 9, holders of $64 million of the existing 4% notes, or 26% of the notes outstanding, had tendered for exchange, and holders of $79 of the existing 13% notes, or 48% of the notes outstanding, had tendered for exchange and delivered consents to the proposed amendments to the13% notes.

Under the amended terms of the exchange offer for the 13% convertibles:

• The initial conversion price of the new 7.5% convertibles will be fixed at $4.00 per share. Previously, it was going to be 120% of the daily volume-weighted average price of the company's stock, subject to a floor of $4.50 and a cap of $7.50;

• The new 7.5% convertibles will be secured by a first-priority lien on substantially all of the company's assets based in the United States and a pledge of some interests in foreign subsidiaries; and

• The minimum consent condition was reduced to more than 50% of the principal amount of existing 13% convertibles from 75%.

Consent solicitation

As previously reported, the company is soliciting consents to amend some terms of the indenture governing the 13% convertibles. Holders cannot tender their 13% convertibles without giving consent and vice versa.

The consent solicitation was amended so that:

• If the company receives the consent of holders of more than 50% but less than 75% of the 13% convertibles, the indenture will be amended to allow the company to incur the new 7.5% convertibles and grant a lien making the new 7.5% convertibles ratably secured by a first-priority lien on substantially all of its U.S.-based assets and a pledge of some interests in foreign subsidiaries;

• If the company receives the consent of holders of 75% or more of the 13% convertibles, the indenture will be amended to provide for the security interest and all of the collateral securing the company's obligations under the existing 13% convertibles be released and to terminate the existing collateral documents and eliminate many of the restrictive covenants and some events of default in the indenture governing the existing 13% convertibles; and

• The new 7.5% convertibles will have the benefit of restrictive covenants similar to the restrictive covenants contained in the indenture governing the existing 13% convertibles.

Dutch auction details

Holders of 4% convertibles who tender should specify an exchange ratio at which they would be willing to exchange their convertibles.

The company said holders must submit tenders in the range from $425 to $500 principal amount of new 4% convertibles that would be issued for each $1,000 principal amount of existing 4% convertibles.

If the clearing exchange ratio is $425, the company will issue $85 million principal amount of the new 4% convertibles, and if the clearing exchange ratio is $500, the company will issue $100 million principal amount of new 4% convertibles, in each case assuming that $200 million principal amount of existing 4% convertibles are tendered.

The company plans to offer an additional $40 million principal amount of the new 4% convertibles in an underwritten offering for cash.

Upon conversion of the new 4% convertibles, holders will receive 229.8851 shares of common stock plus an additional number of shares worth $300 per $1,000 principal amount of notes.

The exchange offers are conditioned on the receipt of shareholder approval to issue the new convertibles and increase the company's authorized common shares to 240 million from 120 million. On Feb. 9, stockholders approved the terms of the exchange offers. As such, the company will either close the current exchange offers on Feb. 11 or terminate the offers if their conditions are not met.

Lazard Capital Markets LLC is the dealer manager. The information agent is Proxy Advisory Group, LLC (212 616-2180), and the exchange agent is U.S. Bank NA.

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

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