September 16, 2008 / 5:32 PM / 11 years ago

Solar energy companies hit by Lehman stock loans

NEW YORK, Sept 16 (Reuters) - The shares of Solar energy companies Evergreen Solar Inc ESLR.O, JA Solar Holdings Co Ltd JASO.O and SunPower Corp (SPWR.O) slumped on Tuesday on fears Lehman Brothers Holdings Inc’s LEH.N bankruptcy could put at risk share loans they had with the bank.

But JA Solar and SunPower shares reversed early losses and turned higher by midday, as investors discounted the potential reduction in earnings per share from the deals.

Under the deals, the three companies all lent shares to a Lehman subsidiary as part of stock issuances. If Lehman fails to return the shares as laid out under the agreements, they could be counted as part of their outstanding share counts, diluting the earnings per share of the companies.

“The borrower is not going to pay those (shares) back, as I see it,” said Jonathan Hoopes, an analyst with ThinkPanmure, who trimmed his earnings-per-share forecasts for JA Solar, SunPower and Evergreen.

Investors use earnings per share as part of a calculation to determine whether a company’s stock price is valued at a premium or discount to its peers.

Evergreen Solar could face an earnings per share dilution of nearly 20 percent if the 30.9 million shares in lent to Lehman are not returned and take a $39.9 million non-cash charge it paid to the bank in fees.

That helped send Evergreen shares tumbling as much as 28 percent, hitting its lowest level since December 2004, before paring losses.

Its larger solar peer, SunPower, could see a 3.4 percent dilution in its share count, while JA Solar’s dilution could be about 4 percent.

SunPower shares were up 1.6 percent at $73.59 in afternoon trading after slipping to a two-month low at 65.11 per share, while JA Solar rose 1.4 percent to $10.59 after falling to a 13-month low of $8.90.

Evergreen shares were down 10.5 percent at about $4.08 per share. That weakness was exacerbated by its drop below $5 per share, which many investors set as a floor to own a company’s stock. (Reporting by Matt Daily; Editing by Andre Grenon)

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