Massachusetts-based Evergreen Solar, Inc. (Nasdaq: ESLR) announced plans to sell $300 million worth of senior convertible notes due 2013.
Evergreen Solar expects to grant to the underwriters a 30-day option to purchase up to an additional $45 million aggregate principal amount of notes to the extent the underwriters sell more than $300 million aggregate principal amount of notes in the note offering.
The notes will be convertible into cash up to their principal amount and shares of Evergreen Solar’s common stock for the remainder, if any, of the conversion value in excess of such principal amount.
The interest rate, conversion rate, conversion price, offering price and other terms of the notes will be determined at the time of pricing of the notes.
Lehman Brothers Inc. is the sole book-running manager for the notes offering.
Evergreen Solar intends to use the net proceeds to complete the construction and equipping of its solar panel manufacturing facility located in Devens, Massachusetts, to begin construction of a manufacturing facility that will produce heat resistant string to be used in the manufacturing of Evergreen Solar’s wafers and for general corporate purposes.
In connection with the, Evergreen Solar plans to enter into a capped call transaction with an affiliate of Lehman Brothers Inc. The capped call transaction is expected to increase the effective conversion premium of the notes and to reduce the potential dilution upon conversion of the notes.
If the underwriters of the notes offering exercise their option to purchase additional notes, Evergreen Solar expects to use a portion of the proceeds from the sale of such notes to increase the notional size of the capped call transaction. Various terms related to the capped call transaction will be determined contemporaneously with the pricing of the notes.
A capped call is an option with a pre-established profit cap.
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