Evergreen Solar, Inc. (NasdaqCM: ESLRD), a manufacturer of
String Ribbon® solar power products with its proprietary, low-cost
silicon wafer technology, today announced its intent to shut down
operations at its Devens manufacturing facility to better position
the Company to pursue its industry standard size wafer strategy and
preserve the Company’s liquidity. The Company also provided updates
on its industry standard wafer development activities and selected
preliminary results for the quarter ended December 31, 2010.
The Company intends to completely shut down the Devens
manufacturing facility by the end of the first quarter of 2011.
Michael El-Hillow, President and Chief Executive Officer, explained
the considerations behind the Company’s decision. “While overall
demand for solar may increase, we expect that significant capacity
expansions in low cost manufacturing regions combined with
potential adverse changes in government subsidies in several
markets in Europe will likely result in continuing pressure on
selling prices throughout 2011. Solar manufacturers in China have
received considerable government and financial support and,
together with their low manufacturing costs, have become price
leaders within the industry. While the United States and other
western industrial economies are beneficiaries of rapidly declining
installation costs of solar energy, we expect the United States
will continue to be at a disadvantage from a manufacturing
standpoint.”
Mr. El-Hillow added, “Although production costs at our Devens
facility have steadily decreased, and are now below originally
planned levels and lower than most western manufacturers, they are
still much higher than those of our low cost competitors in China.
We have consistently stated during quarterly conference calls
throughout 2010 that we would continue to manufacture in Devens as
long as it was economically feasible. During the month of December,
we experienced a 10% decrease in average selling prices from the
beginning of the fourth quarter. As industry selling prices
continue their rapid declines into 2011, panel manufacturing in
Devens, either fully or partially, is no longer economically
feasible, consequently requiring a complete shutdown of the
facility. We believe this is the right long-term decision for the
Company, and better positions the Company to complete its
previously announced recapitalization plan and pursue the Company’s
strategy of becoming the low cost producer of industry standard
size wafers.”
Evergreen Solar will continue to operate its high temperature
filament plant in Midland, Michigan and its wafer facility in
Wuhan, China. With approximately 75 megawatts of installed wafer
capacity in Wuhan, the Company will continue to supply its
outsourcing partner with wafers for conversion into Evergreen Solar
branded solar panels.
Expected Financial Impact of Devens Closure
As a result of the closure of the Devens manufacturing facility,
the Company expects to incur non-cash charges of approximately $340
million associated with the write-off of existing building,
facilities and equipment. Furthermore, approximately $150 million
of intangible and cash-related prepayments associated with various
silicon contracts are under review to determine whether additional
non-cash charges will be required. These charges are expected to
impact both the fourth quarter of 2010 and the first quarter of
2011, and the amount of the charges will be determined during the
Company’s preparation of its annual financial statements for the
year ended December 31, 2010.
In addition to the non-cash charges mentioned above, the Company
expects to incur approximately $15 million of costs associated with
employee severance and out placement services, facility
decommissioning and other costs required to close the facility.
These cash charges are expected to be incurred over a twelve month
period. In total, the Company expects that approximately 800
employees will be affected by this action.
In addition to eliminating the risks associated with continued
manufacturing in a high cost market in a period of rapidly
declining prices, the Company expects that a complete facility
shutdown will help preserve cash and facilitate the Company’s
pursuit of the wafer strategy discussed below.
Wafer Technology Update
Development activities associated with the Company’s industry
standard size String Ribbon™ wafer have progressed substantially in
the second half of 2010, resulting in the production of more than
60,000 wafers manufactured using modified existing quad ribbon
furnaces. These wafers are performing comparably to those produced
using the Company’s existing furnaces in Devens and China. Ten
prototype furnaces will be installed and the Company will begin
producing industry standard size wafers in much greater quantities
this quarter. Pilot production of approximately 25 megawatts is
expected to begin by the fourth quarter of 2011.
Mr. El-Hillow commented, “We have expanded our discussions with
established solar companies in low cost regions and have provided
samples of our industry standard wafers for their evaluation.
Preliminary results have been positive and we have also begun
in-depth negotiations to obtain significant financial support for
our wafer manufacturing expansion on terms similar to what we
received for our current wafer facility in Wuhan. Initial interest
is high as we have shared the early results of development with
potential partners. Our future expansion will be based on the
industry standard size wafer, which is central to our strategy of
manufacturing the lowest cost wafer, in an industry standard form
factor, and providing a wafer that would enable the lowest cost
solar panel utilizing multi-crystalline silicon wafers.”
Preliminary December 2010 Quarter Results
Shipments for the fourth quarter of 2010 increased to
approximately 47 megawatts, a new Company record, at an average
selling price of approximately $1.90 per watt. Mr. El-Hillow noted,
“Evergreen shipped a record volume during the quarter even in the
face of adverse weather conditions in its primary markets of Europe
and North America.”
All data for the fourth quarter of 2010 are preliminary and
subject to revision based upon Evergreen Solar’s review through
ordinary quarter and fiscal year-end closing procedures. The
preliminary financial data included in this press release has been
prepared by, and is the responsibility of, Evergreen Solar, Inc.'s
management. PricewaterhouseCoopers LLP has not audited, reviewed,
compiled or performed any procedures with respect to the
accompanying preliminary financial data. Accordingly,
PricewaterhouseCoopers LLP does not express an opinion or any other
form of assurance with respect thereto.
Where You Can Find Additional Information
Further details regarding the terms and conditions of the
recapitalization plan, including the exchange of convertible debt,
can be found in the registration statement that has been filed with
the SEC, and in a tender offer statement on Schedule TO
that has been filed with the SEC. Any investor holding the
company’s existing notes should read the registration statement,
the tender offer statement and other documents the company has
filed or will file with the SEC for more complete information about
the issuer and the recapitalization plan.
The registration statement, the tender offer statement and other
related documents can be obtained for free from the SEC’s
Electronic Document Gathering and Retrieval System (EDGAR), which
may be accessed at www.sec.gov. Documents are also available for
free upon written or oral request made to the office of the
Corporate Secretary, Evergreen Solar, Inc., 138 Bartlett Street,
Marlboro, Massachusetts 01752 (Telephone (508) 357-2221) and from
the Company’s website at www.evergreensolar.com.
About Evergreen Solar, Inc.
Evergreen Solar, Inc. develops, manufactures and markets String
Ribbon solar power products using its proprietary, low-cost silicon
wafer technology. The Company's patented wafer manufacturing
technology uses significantly less polysilicon than conventional
processes. Evergreen Solar's products provide reliable and
environmentally clean electric power for residential and commercial
applications globally. For more information about the Company,
please visit www.evergreensolar.com. Evergreen Solar and String
Ribbon are registered trademarks of Evergreen Solar, Inc.
Safe Harbor Statement
This press release includes statements regarding expectations,
beliefs, strategies, goals, outlook and other non-historical
matters. Any such statements are forward-looking statements made
pursuant to the safe harbor provisions of Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements include
but are not limited to statements about general solar industry
market conditions, including additional production capacity coming
on-line, production volumes and changes in government subsidies,
and expectations regarding average selling prices, the timing of
the shutdown of the Company’s Devens facility, the size of any
non-cash charges, the estimated cash costs associated with a
shutdown and the anticipated positive impact of the shutdown on the
Company’s overall cash position, and the development of the
Company’s industry standard size wafer program, including
developments in China and the Company’s ability to increase its
production of standard sized wafers in China. These forward-looking
statements are neither promises nor guarantees and are subject to a
number of risks and uncertainties that could cause actual results
to differ materially from the Company’s current expectations.
Factors that could cause or contribute to such differences include,
but are not limited to: further declines in average selling prices
of the Company’s products, risks associated with the potential
shutdown of the Company’s Devens facility, the risk that the
Company will not be successful in completing its recapitalization
plan and the risk that the Company will be unsuccessful in
developing our industry standard size wafer program at competitive
prices. Further discussions of these and other potential risk
factors may be found in the Company’s public filings with the SEC
(www.sec.gov), including its Form 10-K for the fiscal year ended
December 31, 2009 and its Registration Statement on Form S-4 (as
amended) originally filed on December 6, 2010. Forward-looking
statements speak only as of the date they are made. The Company
undertakes no obligation to update any forward-looking statements,
except as may be required by law.
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