Evergreen Solar to close U.S. module plant: US$70 million write down on Sovello JV

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As part of its plans to conserve cash and reduce module assembly costs to remain competitive as module prices have declined over 30% since last year, Evergreen Solar is planning to shift its Devens module assembly production to China, starting in mid-2010. When the company announced its manufacturing partnership in China with Jiawei Solar back in May, 2009 executives had said that the Deven’s module plant would continue to make modules for the expected expansion of the U.S. market. Now the company will shut-down production next year and only reopen the facility should demand dictate.

“Our Devens facility has continuously met its key operational goals of rapid sequential production increases and significantly reduced manufacturing costs since opening in mid-2008,” noted Richard M. Feldt, Chairman, CEO and President, Evergreen Solar. “In particular, we are especially pleased with the success of our Quad wafer production performance, which has met or exceeded our expectations to date. However, panel prices have fallen over 30% since mid-2008 making it very difficult for manufacturers located in high-cost regions to remain price competitive. Therefore, we are accelerating our strategic initiative of increasing the focus on our unique wafer manufacturing technology; and we will begin to transition our Devens-based panel assembly to China in mid-2010.”

In reporting third quarter financial results, Evergreen Solar also noted it undertook an impairment charge of approximately US$70 million on its investment in Sovello. The company noted in the revaluation of this asset that if Sovello was not able to ‘restructure the terms of its loan agreements or its operations continue to deteriorate, the carrying value of this investment could be further impaired in the future.’

With respect to quarter results, Evergreen Solar posted sales of US$77.7 million, including US$2.2 million of fees from the Sovello JV. Second quarter sales were US$63.8 million, including $1.1 million of fees.

The company shipped 31.3 MW from its Devens facility, an increase of 35% over second quarter shipments of 23.2 MW, shipping all its production in the quarter.

Total manufacturing costs were reduced to US$2.24 per watt, down 17% from US$2.70 per watt for the second quarter. Wafer manufacturing cost was approximately US$0.75 per watt, down from US$0.85 per watt in the second quarter.

Production of its String Ribbon cells will continue at the Deven’s facility, Evergreen Solar said. As a single ‘open’ facility the module line is in affect mothballed, subject to market demand conditions before it could be restarted.

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