* Failure to pay will trigger default in 30 days
* Talks with debt holders to deleverage are ongoing
* Company could be looking for a buyer
(Adds analysts' comments, background)
By Nichola Groom
LOS ANGELES, July 15 U.S. solar company
Evergreen Solar Inc ESLR.O warned on Friday it would not make
$4.2 million of interest payments due on its senior convertible
notes, citing its weakened liquidity.
The failure to pay the interest will trigger a default if
unpaid for 30 days, the company said in a filing with the U.S.
Securities and Exchange Commission. The interest payments were
due on Friday.
The announcement comes four days after Evergreen said in a
regulatory filing a default under its obligations to note
holders would likely result in a bankruptcy filing.
The company's failure to make interest payments is the
latest chapter in a downward spiral that has included the
shuttering of a much-touted, but short-lived Massachusetts
manufacturing facility and the virtual disappearance of the
company's once-lofty stock market value.
Based in Marlboro, Massachusetts, Evergreen has been
struggling to regain its financial footing in the face of stiff
competition from inexpensive Chinese rivals and a massive
increase in the global supplies of solar panels that has sent
prices into a tailspin.
Evergreen's solar wafer technology was a favorite of
investors in 2007 and 2008 because it used dramatically less of
the industry's key pricey raw material, polysilicon. At the
time, however, silicon prices were 10 times what they are
today, making that advantage less meaningful.
The company is still in talks with its debt holders to
restructure its debt, although one analyst said they are
running out of time.
"I don't know what else is going to get the bondholders to
get off their dime, but every day they wait there is less and
less to recover," said Wunderlich Securities analyst Theodore
As of April 30, Evergreen had about $33 million in cash,
the company said in May.
"I don't think there is anything left now," O'Neill said.
Another analyst said the company was likely looking for a
buyer, adding that a sale would be preferable to bondholders
than a Chapter 11 bankruptcy filing.
"My guess is Evergreen is in active talks with potential
buyers right now," GTM Research analyst Brett Prior said.
He added, however, that potential acquirers -- likely
Chinese solar companies or rival wafer makers -- might be gun
shy about making a purchase with such turmoil in the industry.
"Pricing has come down dramatically in the last several
years and a lot of these players are struggling," Prior said.
It also had total liabilities of $455.5 million as of April
2, including $355.8 million of convertible notes.
The company is skipping a $4.1 million interest payment on
its 4 percent senior convertible notes due 2013 and a payment
of more than $90,000 on its 4 percent convertible subordinated
additional cash notes due 2020.
Evergreen was forced earlier this year to close its factory
in Devens, Massachusetts, and cut 800 jobs to preserve cash.
Instead, it has pursued a strategy of outsourcing manufacturing
to China. In April, Evergreen said it had been hurt by sluggish
demand this year and may need to raise cash sooner than
Also this week, the company said it was no longer in
compliance with Nasdaq listing standards and, if delisted, the
holders of its convertible notes would have the right to
require the company to buy back their notes, which it would
almost certainly be unable to do.
Evergreen shares have traded below $1 since late May,
closing at $0.39 on Friday. The stock has been hammered since
late 2007, when it hit an all-time high of $113.10.
(Reporting by Nichola Groom; editing by Tim Dobbyn, Gary