Evergreen Solar gets tenders for $45.5 million 4% convertibles, accepts no 13% convertibles

By Angela McDaniels

Tacoma, Wash., Feb. 14 - Evergreen Solar, Inc. said it received tenders for $45.5 million principal amount of its 4% senior convertible notes due 2013 and accepted all of the notes for exchange.

Holders tendered less than $50 million principal amount of the company's 13% convertible senior secured notes due 2015, meaning the minimum tender and consent conditions were not met. The company will not accept any of these notes for exchange.

Exchange offers for the convertibles began Jan. 3 and expired at 5 p.m. ET on Feb. 11. The expiration date was extended from Feb. 9 and, prior to that, Jan. 31.

"The exchange offers, as amended with inputs from our largest noteholders and financial adviser, provided the noteholders the opportunity to own a significant portion of Evergreen Solar," president and chief executive officer Michael El-Hillow said in a company news release. "When we assessed the option of enriching our offers even further in order to induce their further participation, our analysis concluded that to do so would not be in the best interests of our shareholders given that the earliest maturity for any of our notes is in mid-2013."

4% convertibles offer

Evergreen offered 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 clearing exchange ratio is $500 principal amount of new 4% convertibles per $1,000 principal amount of existing 4% convertibles.

Holders were asked to submit tenders in a range from $425 to $500 principal amount of new 4% convertibles for each $1,000 principal amount of existing 4% convertibles.

About $22.7 million principal amount of the new convertibles will be issued in the offer. Holders will also receive accrued interest in cash.

The settlement date is expected to be Feb. 17.

The initial conversion price of the new 4% convertibles is $4.35. Upon conversion, holders will receive 229.8851 shares of common stock plus an additional number of shares worth $300 per $1,000 principal amount of notes.

Following the exchange offer, $203.8 million of the existing 4% convertibles will remain outstanding.

When the offer began, the company said it planned to offer an additional $40 million principal amount of the new 4% convertibles in an underwritten offering for cash.

13% convertibles offer

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

The initial conversion price of the new 7.5% convertibles was going to be $4.00 per share.

The minimum consent condition required that more than 50% of the existing 13% convertibles be tendered for exchange. This requirement was lowered from 75% on Jan. 29.

Consent solicitation

The company solicited consents to amend some terms of the indenture governing the 13% convertibles. Holders could not tender their 13% convertibles without giving consent and vice versa.

On Jan. 29, the consent solicitation was amended so that:

• If the company received the consent of holders of more than 50% but less than 75% of the 13% convertibles, the indenture would have been 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 received the consent of holders of 75% or more of the 13% convertibles, the indenture would have been 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 would have had the benefit of restrictive covenants similar to the restrictive covenants contained in the indenture governing the existing 13% convertibles.

The exchange offers were 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. A shareholder meeting was scheduled for Jan. 31 and adjourned until Feb. 9.

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

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

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