Evergreen Solar expands and prices notes offer

Solar panel maker Evergreen Solar Inc. on Friday widened the scope of its public offering to up to $325 million in notes due 2013, from $300 million, and set an initial price of $12.11 per share.

The initial conversion rate is about 82.6 shares per $1,000 in 4 percent senior convertible notes.

The company also gave underwriters an option to purchase an additional $48.8 million in notes, compared with a previous $45 million option.

In connection with the offering, the company entered into a capped call transaction with an affiliate of Lehman Bros. The capped call, designed to reduce the potential dilution of the notes, increases the conversion price to $19 per share, Evergreen said.

A capped call is an option with a pre-established profit cap.

Evergreen plans to use net proceeds from the offering to pay initial costs of the capped call transaction, expenses related to the offering and for building and stocking its solar panel manufacturing plant in Devens, Mass.

Evergreen also said it has entered into a stock lending agreement with an unnamed Lehman Bros. affiliate in which the company has agreed to lend about 30.9 million shares. When the note offer closes, the affiliate has agreed to sell 18.2 million of the shares at $9.50 each. The remaining shares will be sold at current market prices.

Evergreen said the deal is intended as a hedge for investors in its notes offering and capped call transaction.

Evergreen will receive no proceeds from the sale of those shares.

Evergreen shares hares fell 91 cents, or 8.4 percent, to $9.92 in premarket electronic trading.