Evergreen Solar said Tuesday it's suing Barclays and Lehman Brothers Holdings Inc. for what it says was a breach of contract by Lehman to sell its Evergreen shares to Barclays instead of returning them to Evergreen.
Evergreen (NDSQ: ESLR) contends that the bankrupted Lehman should have returned the 30.9 million shares the solar company had loaned to the investment firm as part of a deal to raise $375 million earlier this year. After filing for bankruptcy in September, Lehman sold some of its assets, including 12.2 million Evergreen shares, to Barclays.
The Marlboro, Mass.-based solar-panel maker filed the lawsuit in the U.S. Bankruptcy Court for the Southern District Court of New York, the same court that had approved the sales of the shares and other Lehman assets to U.K.-based Barclays.
Barclays spent about £0.14 billion ($250 million) in cash to buy roughly £40 billion ($72 billion) worth of trading assets and £38 billion ($68 billion) worth of liabilities form Lehman. Barclays also purchased Lehman's New York office and two data centers in New Jersey for about £0.8 billion ($1.5 billion).
On Sept. 22, Barclays said it had reopened Lehman's North American operations in fixed income and equity sales, trading and research, investment banking and other businesses under the new ownership. The new operations are now run by Barclays Capital.
Seth Martin, a Barclays Capital spokesman, said the company has no comment on the lawsuit.
Evergreen is asking the court to order Barclays to return the 12.2 million shares and to prevent Barclays from selling or otherwise transferring the Evergreen shares to another business.
"We are outraged that a substantial number of our shares were transferred from Lehman Brothers in bankruptcy in complete disregard for Lehman Brothers' obligations to return the shares under its share lending agreement with Evergreen Solar," said Michael El-Hillow, Chief Financial Officer of Evergreen Solar, in a statement.
Evergreen said it had agreed to loan the 30.9 million to Lehman's European affiliate, Lehman Brothers International (Europe) as part of an agreement for Lehman to act as an underwriter for a $375 million convertible debt offering completed in July this year.
After Lehman filed for bankruptcy, Evergreen told analysts that it would have to count the 30.9 million shares as part of its outstanding common shares if it isn't able to get them back before July 15, 2013. The move could effectively dilute Evergreen's share price by up to 26 percent, wrote Jeff Osborne, a Thomas Weisel Partners analyst in a research note last month (see Lehman's Fall to Create Greentech Woes).
Evergreen said it wasn't able to find out who held its shares following Lehman's bankruptcy filing, and said that its demands to Lehman to return the shares were ignored.
Evergreen discovered the sale of its 12.2 million shares when Barclays filed papers with the U.S. Securities and Exchange Commission earlier this month.
Evergreen's stock, along with those from other solar companies, haven't fared well since Lehman's bankruptcy filing and the subsequent fall of other investment and mortgage houses (see Energy Biz Boosts GE, Solar Stocks Still Battered).
Evergreen shares fell 9.22 percent to reach $3.25 per share in recent trading Tuesday.