Analyst: Evergreen Solar Will Struggle To Pay Debts
The long downward spiral of Marlborough’s Evergreen Solar hit at least close to bottom on Aug. 15 when the company filed for Chapter 11 bankruptcy protection.
Now the company’s creditors will have to wait and see how much, if any, of their money they’ll get back.
The solar panel manufacturer said it has reached an agreement with a group of its senior note holders to take its assets if it can’t get a better offer.
In filings in Delaware bankruptcy court, Evergreen said it has unsecured debts worth a total of $486 million, with $211 million owed to the holders of 4-percent notes through U.S. Bank of Minnesota. The company lists the quasi-public agency MassDevelopment as its fourth-largest creditor, with $1.5 million owed for rent. Farther down the line, Evergreen owes Lightower Fiber Networks of Boxborough $16,016.
Assets & Liabilities
In the bankruptcy papers, Evergreen lists its assets at $424,470,000, which would leave it $61 million short of being able to pay its debts. But one analyst, Theodore O’Neill, who follows Evergreen for Wunderlich Securities, said he doesn’t think the company will be able to pay even a quarter of what it owes.
O’Neill said the $486-million figure represents the book value of the company’s assets, not the price anyone would actually pay for them. The company makes a unique type of solar wafer that uses less polysilicon than other versions, but the price of polysilicon has plummeted in recent years, making those wafers less appealing. That makes both the company’s proprietary technology and its manufacturing plant in Devens unappealing to potential buyers, O’Neill said.
“There’s not much of value there,” he said. “It’s a lovely factory. I’ve been in it many times. But all the equipment is sized to use with that wafer.”
O’Neill said the company’s bondholders must be paid before its suppliers, which makes it doubtful that any creditors other than the bondholders will be made whole.
Evergreen, which has already closed the Devens plant, announced that its reorganization will include stopping production at its other U.S. plant in Michigan and laying off 65 people in the U.S. and Europe.
Among the employees keeping their jobs are 25 employees in Wuhan, China. The company said it will keep running the Chinese plant while negotiating with its Chinese investors. It said it is exploring converting the Chinese manufacturing facility so that it can produce industry-standard wafers.
O’Neill said the bankruptcy filing triggers a requirement that Evergreen repay a $33- million investment that a Wuhan government division made in the Wuhan plant. He said it makes sense for Evergreen and its bondholders to prioritize repaying that money to keep the factory from essentially being repossessed.
“That’s the only thing, I think, that’s got any real value,” he said.
O’Neill said there are no clear business lessons in Evergreen’s fate. The company was a victim mostly of bad timing. It was trying to bring a low-polysilicon solar panel into the mainstream just as polysilicon suddenly became too cheap to worry about.
“That was about at the same time the capital markets went poof,” O’Neill said, and that meant the company lost its ability to easily finance its activities. “I don’t think there was a management issue there,” he said. “The management was pretty good.”
Evergreen Solar did not return calls for this story.
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