Evergreen entered into a capped call transaction with an affiliate of Lehman Brothers, the lead underwriter, that will raise the effective conversion price to the company to $19.00 per share. Lehman will provide the extra stock Evergreen would have to issue should its shares trade above $12.11 and below $19.00.
This way, if the shares do appreciate, as the company and shareholders hope, the conversion will have less of a dilutive impact.
Carboy said this was a smart strategy for Evergreen because it allows the company to raise equity at a relatively cheap price, providing the capital it needs to grow while minimizing the dilutive impact to shareholders. The downside for investors is that for the plan to work, the share price must appreciate, meaning the company must perform well both operationally and in share price value, Carboy added.
Friday's announcement widened the scope of an initial pricing of $300.0 million of notes announced Wednesday.
Cowen analyst Robert W. Stone said that Evergreen's transaction is significant for the company because the raised capital make it much more certain that its second phase of expansion at the Devens factory will come to fruition. Stone, who rates Evergreen as "outperform," said the expansion "should drive strong growth in Evergreen's revenues and earnings in the next couple of years."
thx, trans, & saludos. Now, with this reading, methinks perhaps there are some intricate and thorny derivatives to be unwound, and not entirely in disfavor of the real producer (versus the paper shufflers), Evergreen Solar, victim of the financial collapse, fighting gamely for American jobs and a handsome return for American ingenuity.