Update: In a conference call with financial analysts, held today, Evergreen Solar’s Chairman, CEO and President, Richard Feldt, responded to one of the last questions in the hour long call over the expected outcome for Sovello. He noted that the company had only weeks to seek a buyer that would probably acquire the company at ‘fire-sale’ prices or enter into insolvency.
“It’s very, very hard to handicap. I do think that whatever the outcome is, it’s going to happen over the next few weeks,” responded Feldt. “Probably only two, one it goes insolvent, two someone ends up coming in and acquiring the assets at fire sale prices.
Feldt’s comments at the end of the call paint a gloomier picture of the precarious position Sovello is currently in, compared to the prepared wording in Evergreen’s press release, detailing fourth quarter financial results, and previously issued.
Analyst, Ben Pang of Caris & Company asked the pertinent question.
In releasing fourth quarter, 2009 financial results, Evergreen Solar warned that its German-based joint venture Sovello could face bankruptcy over the issue of repaying an EU grant, which was deemed to have been wrongly applied for due to the involvement of Q-Cells as a partner that exceeded qualification levels for a small to medium sized firm. Sovello is appealing the EU Commission findings.
Sovello has been in default under its bank loan agreements since the end of 2008, though a bank syndicate has waivered some of Sovello’s loan covenant violations, and has not yet demanded repayment, the strapped for cash ‘String Ribbon’ producer continues to struggle financially.
Evergreen said in a statement that it recorded a non-cash charge of approximately US$40.9 million, reflecting a final write-off of its actual remaining investment in Sovello.
Other charges on Evergreen from its Sovello involvement in the quarter, included US$8.1 million payments under a guarantee and US$7.3 million for estimated payments related to Sovello’s bank and for other expected costs.