Evergreen Solar Announces Offering of $300 Million of Senior Convertible Notes

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 acting as the sole book-running manager for the notes offering.

Evergreen Solar intends to use the net proceeds from the notes offering, after deducting underwriting discounts and Evergreen Solar’s estimated expenses related to the offering, including the cost of the capped call transaction and registered sale of borrowed shares of common stock described below, to complete the construction and equipping of its fully integrated 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, including purchases of or prepayments for polysilicon and other raw materials, and working capital needs.

In connection with the notes offering and contemporaneously with the pricing of the notes, 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.

In connection with establishing its initial hedge of the capped call transaction, the counterparty has advised Evergreen Solar that it (and/or its affiliates) expects to enter into various over-the-counter cash settled derivative transactions with respect to Evergreen Solar’s common stock concurrently with or shortly after the pricing of the notes and to purchase Evergreen Solar’s common stock in secondary market transactions shortly after the pricing of the notes. These activities could have the effect of increasing or preventing a decline in the trading price of Evergreen Solar’s common stock concurrently with or following the pricing of the notes. In addition, Evergreen Solar has been advised by the counterparty that it (and/or its affiliates) expects to modify or unwind its hedge positions by purchasing or selling Evergreen Solar’s common stock in secondary market transactions and/or entering into or unwinding various derivative transactions prior to the maturity of the notes (including during any conversion period related to the conversion of the notes). These activities could have the effect of increasing, preventing a decline in or adversely impacting the trading price of Evergreen Solar’s common stock or the notes. The underwriters of the notes offering are not obligated to engage in or to continue to engage in any of these activities.

In connection with the notes offering and the proposed entry into the capped call transaction and contemporaneously with the pricing of the notes, Evergreen Solar expects to enter into a common stock lending agreement with an affiliate of Lehman Brothers Inc., pursuant to which Evergreen Solar will agree to lend to such affiliate a number of shares of common stock that will be determined contemporaneously with the pricing of the notes. Concurrently with the notes offering, such affiliate of Lehman Brothers Inc. will offer and sell a portion of the borrowed shares in a registered public offering pursuant to a separate preliminary prospectus supplement. The offering price of such portion of the borrowed shares will be determined contemporaneously with the pricing of the notes. The remaining borrowed shares will be sold subsequently at prevailing market prices at the time of sale or at negotiated prices. The affiliate of Lehman Brothers Inc. will receive all of the proceeds from the sale of the borrowed shares. Evergreen Solar will not receive any of the proceeds from the sale of the borrowed shares, but will receive a nominal lending fee for the use of the borrowed shares. The sale of the borrowed shares is intended to facilitate privately negotiated transactions or short sales by which investors in the notes will hedge their investment in the notes and/or by which the counterparty (and/or its affiliates) will hedge the capped call transaction. The delivery of the borrowed shares is contingent upon the completion of the notes offering. The affiliate of Lehman Brothers Inc. will be required to return the borrowed shares under the stock lending agreement when the notes are no longer outstanding and in certain other circumstances. Lehman Brothers Inc. is acting as the sole book-running manager for the borrowed shares offering.

While the borrowed shares will be considered issued and outstanding for corporate law purposes, Evergreen Solar believes that under U.S. GAAP, as currently in effect, the borrowed shares will not be considered outstanding for the purpose of computing and reporting earnings per share because the borrowed shares must be returned to Evergreen Solar no later than July 15, 2013, the maturity date of the notes.

This press release does not constitute an offer to sell, or the solicitation of an offer to buy, securities. Furthermore, Evergreen Solar will not sell any of the notes and has been advised by Lehman Brothers Inc. that it and its affiliates will not sell any of the borrowed shares in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification of the notes or the borrowed shares, as the case may be, under the securities laws of any such state or jurisdiction.

Copies of the preliminary prospectus supplements relating to the notes and borrowed shares offerings and the accompanying prospectus to each may be obtained from Lehman Brothers Inc., c/o Broadridge Integrated Distribution Services, 1155 Long Island Avenue, Edgewood, NY 11717, telephone: 888-603-5847 / fax: 631-254-7140, or email: This email address is being protected from spambots. You need JavaScript enabled to view it. .