According to StreetInsider.com, Piper Jaffray analyst Jesse Pichel has commented on the solar stocks that are related to the Lehman bankruptcy, saying that Sunpower (SPWR), JA Solar (JASO) and Evergreen Solar (ESLR) are negatively affected with respect to prior convertible bond transactions and stock lending agreements. The firm said it would be prudent to assume the worst.
On JASO: “We estimate JASO would realize ~4% dilution on stock and incur a non-cash write off of $7M for the book value of the capped call, and also write off a $100M investment in a LEH vehicle.”
On SPWR: “worse case scenario“ 2.9M (~3%) share dilution.”
On ESLR: “ESLR worse case scenario – lose the $39.5M premium if the capped call transaction with Lehman is not replaced, as well as dilute share count by 30M (~25%) without getting anything in return for the dilution.”
Evergreen Solar (ESLR) certainly stands to lose the most and the stock has been punished as a result, trading at 4 year lows and losing nearly 50% of its value in the past few trading days.
The firm believes the downside is fully priced into shares of JA Solar (JASO) and SunPower (SPWR) at this time.