Evergreen Solar Announces Pricing of $325 Million of Senior Convertible Notes and Entry into Stock Lending Agreement and Capped Call Transaction

MARLBORO, Mass.--()--Evergreen Solar, Inc. (Evergreen Solar) (Nasdaq: ESLR), a manufacturer of solar power panels, announced today the pricing of its public offering of $325 million aggregate principal amount of 4% senior convertible notes due 2013 (the notes). Evergreen Solar has granted the underwriters a 30-day option to purchase up to an additional $48.75 million aggregate principal amount of notes to the extent the underwriters sell more than $325 million aggregate principal amount of notes in the notes offering.

The notes will be convertible into cash up to their principal amount and shares of Evergreen Solars common stock for the remainder, if any, of the conversion value in excess of such principal amount at the initial conversion rate of 82.5593 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $12.11 per share), subject to adjustment. Prior to April 15, 2013, the notes will be convertible upon the occurrence of specified events, and thereafter, at any time prior to maturity, in each case, at a holders option. 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 Solars estimated expenses related to the offering, including the up-front 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 Solars wafers and for general corporate purposes, including purchases of or prepayments for polysilicon and other raw materials, and working capital.

In connection with the notes offering, Evergreen Solar has entered into a capped call transaction with an affiliate of Lehman Brothers Inc. (the counterparty). The capped call transaction increases the effective conversion price of the notes for Evergreen Solar to $19.00 per share and is thus expected 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.

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 Solars common stock concurrently with or shortly after the pricing of the notes and to purchase Evergreen Solars 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 Solars 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 Solars 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 Solars 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, Evergreen Solar has entered into a common stock lending agreement with an affiliate of Lehman Brothers Inc., pursuant to which Evergreen Solar has agreed to lend to such affiliate up to 30,856,538 shares of its common stock. Concurrently with the closing of the notes offering, such affiliate of Lehman Brothers Inc. will sell 18,184,511 shares of the borrowed shares at a price per share equal to $9.50. 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 closing 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 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 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: qiana.smith@broadridge.com.

About Evergreen Solar, Inc.

Evergreen Solar, Inc. develops, manufactures and markets solar power products for residential and commercial applications globally. For more information about Evergreen Solar, please visit www.evergreensolar.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of federal securities laws. Evergreen Solar cautions you that any statements contained in this press release that are not strictly historical statements constitute forward-looking statements. Such forward-looking statements include, but are not limited to, those related to: statements regarding the offerings, the use of the net proceeds from the notes offering, the effect of the capped call transaction and the common stock lending agreement, stabilization and other activities by the counterparty to the capped call transaction (and/or its affiliates) and the belief that the borrowed shares will not be considered outstanding for the purpose of computing and reporting earnings per share. These forward-looking statements are neither promises nor guarantees and involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that could cause actual events to differ materially from those predicted in such forward-looking statements include market conditions, potential fluctuations in the price of Evergreen Solars common stock, or changes in U.S. GAAP or in their interpretation. Additional factors that could cause actual events to differ from those predicted in such forward-looking statements are identified in the notes prospectus supplement and the borrowed shares prospectus supplement and Evergreen Solars other filings with the United States Securities and Exchange Commission (the SEC) that are incorporated by reference into each prospectus supplement, including its Annual Report for the fiscal year ended December 31, 2007 on Form 10-K and Form 10-K/A, and its Quarterly Report for the fiscal quarter ended March 29, 2008 on Form 10-Q, each of which is filed with the SEC (copies of which may be obtained at the SEC's website at: http://www.sec.gov). Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Evergreen Solar disclaims any obligation to publicly update or revise any such statements to reflect any change in its expectations, or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Contacts

Evergreen Solar, Inc.
Michael El-Hillow, 508-357-2221
Chief Financial Officer
melhillow@evergreensolar.com

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Contacts

Evergreen Solar, Inc.
Michael El-Hillow, 508-357-2221
Chief Financial Officer
melhillow@evergreensolar.com