Evergreen Solar To Close Devens Manufacturing Facility

Evergreen Solar, Inc. 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 Dec. 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 CEO, 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.

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, MI 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.

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.

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.In total, the company expects that approximately 800 employees will be affected by this action.

“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,” said El-Hillow. “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.”

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. 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.”