Evergreen Files for Chapter 11, Plans to Sell Assets

For sale: string ribbon wafer technology. No money down. Runs like a dream.

Evergreen Solar will conduct the equivalent of a corporate garage sale.

The troubled company announced today that it has filed for Chapter 11 reorganization. Chapter 11 bankruptcy is typically not as fatal as a Chapter 7 bankruptcy; companies do emerge from it. But Evergreen also announced that it would try to sell its assets under the reorganization, including the String Ribbon technology that is at the core of Evergreen's existence. Without String Ribbon, Evergreen's assets are more generic: leases, factory space, a brand name that's declined. If the trustees can sell String Ribbon, there won't be a lot left to reorganize.

It's been a long, slow and expected decline. In May, Evergreen canceled its conference call with investors and released its Q1 numbers by press release. Some highlights:

Revenues for the first quarter of 2011 were $35.3 million, down 60.4 percent compared to fourth quarter of 2010 revenues of $89.3 million.
Shipments for the first quarter of 2011 were approximately 17.8 megawatts, compared to fourth quarter of 2010 shipments of 46.6 megawatts.
Average selling price for the first quarter of 2011 was $1.86 per watt, down approximately 2 percent from $1.90 per watt recorded in the fourth quarter of 2010.
Gross margin for the first quarter of 2011 was -62.5 percent compared to -84 percent in the fourth quarter of 2010 (an improvement).
Net loss for the first quarter of 2011 was $33.4 million compared to $411.0 million in the fourth quarter of 2010

Late last year, the company announced it would shut down the Devens, Massachusetts-based factory, leading to the loss of 800 jobs in Massachusetts. The state government had provided $58 million worth of loans and other aid to Evergreen in the past. A joint venture in Europe also fell through.

While some of Evergreen's woes can be blamed on the emergence of Chinese module makers and the relentless declines in price in solar panels, Evergreen's own technology bears some of the blame too. Wafers produced via the String Ribbon technique use silicon more efficiently than conventional wafer processes, a potential cost-saver. Unfortunately, the wafers and solar cells produced through the process were sized differently than wafers and cells made through conventional processes. Adopting String Ribbon meant changing a whole slew of manufacturing processes inside of factories. Few third-party panel manufacturers adopted the technology.

Evergreen ultimately became its best and largest customer, producing modules with its factory output. Evergreen improved the compatibility, outsourced some work to China and even opened a wafer factory in China. The market, however, moved faster, and Evergreen's modules sold for $1.88 per watt at the end of last year; other manufacturers were getting as low as $1.40 per watt by that time.

Will anyone buy it? The String Ribbon technology has improved, but in the meantime a whole slew of companies -- Twin Creeks Technologies, Alta Devices, Crystal Solar, 1366 Technologies -- have emerged that tout inexpensive thin wafers. The company 1366 Technologies, in fact, was founded by Ely Sachs, the MIT professor behind Evergreen. Wafer, cell and module makers will likely weigh the costs of the Evergreen assets against the competitiveness of the new companies. The patents could have litigation value.

In the end, Evergreen was both ahead of its time and seemingly often struggling to catch up. It is a pattern you occasionally see in other MIT spin-outs. Greenfuel Technologies (algae), E-Ink (e-paper), the One Laptop Per Child effort, A123 Systems (batteries), and Luminus Devices (LEDs) all started with blazingly original ideas, but subsequently found themselves often saddled with delays and strategy shifts.