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Evergreen Solar trades on smaller market

Marlborough company aims to restructure, stages reverse stock split

By Erin Ailworth
Globe Staff / January 5, 2011

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Evergreen Solar Inc. has transferred to a smaller Nasdaq stock market to buy time to raise its share price and avoid being removed from the technology-heavy exchange altogether.

The move was finalized Dec. 29, after Evergreen’s stock had traded below $1 a share for several weeks — a level that typically leads to delisting, or removal from the exchange. The company now trades on the Nasdaq Capital Market, once known as the SmallCap Market, where smaller companies with lower overall market values often trade. By transferring from the larger Nasdaq Global Market — which lists more than double the companies, including tech giants such as Google Inc. and Microsoft Corp. — Evergreen gained six months to boost its stock price above $1.

Evergreen followed the move with a 1-for-6 reverse stock split, effective Jan. 1, which reduced the number of the company’s shares outstanding and increased the share price to about $3, up from about 50 cents.

Evergreen’s switch in markets is just one of several ways the solar panel manufacturer is attempting to restructure and recapitalize. The debt-laden business has struggled against aggressive competition in China, a poor economy, and increasingly lackluster government support for the country’s solar industry.

When it first went public a decade ago, Evergreen’s shares sold at higher-than-expected prices, closing the first day of trading at $19. The company also attracted attention from the state, which gave Evergreen tens of million of dollars in grants, loans, land, tax incentives, and other aid to build a manufacturing facility at the old Fort Devens Army post northwest of Boston and create hundreds of jobs in state.

Business started to wane as the economy worsened. At the same time, Chinese competitors ramped up manufacturing, using massive government subsidies to produce the world’s cheapest solar panels. Evergreen, which already has some operations in China, said in late 2009 that it expected to shift additional assembly oper ations overseas.

It hasn’t yet, but company officials say the move could happen soon. In its most recent financial filings, the company reported a $27.2 million loss in the quarter that ended Oct. 2.

JPMorgan Chase & Co. analyst Christopher Blansett, who follows Evergreen, said he believes the company is taking the necessary steps to stay in business, including moving production to China, cutting debt, and implementing the reverse stock split.

“The unknown question is are they doing it fast enough to keep afloat,’’ Blansett said. “Honestly, if they can get this done, it’s painful for the people caught up in it, but there’s no question that it will make the company more viable in the future.’’

Michael McCarthy, Evergreen Solar’s director of investor relations and government affairs, said the company is looking to “substantially reduce’’ debt and interest expenses to lower its costs and solar panel prices. At the end of the third quarter, Evergreen’s average panel selling price was just over $2 a watt, he said. That’s about flat from the previous quarter, but still higher than Chinese prices, which range from about $1.50 to $1.80 a watt.

“It’s a very competitive marketplace,’’ said McCarthy, “and the company has to look at what it can do to bring its product to a level of price competitiveness.’’

Erin Ailworth can be reached at eailworth@globe.com.