EverQ partners plan for an offering

Thalheim, Germany-based EverQ, which produces silicon wafers, solar cells and solar modules, is getting ready to take its first step into the larger world of public markets.

The company's backers have approved a third production facility and an initial public offering as part of a major expansion at EverQ.

EverQ is a joint venture of Thalheilm-based Q-Cells, Oslo's Renewable Energy Corp., and Marlboro, Mass.-based Evergreen Solar (Nasdaq: ESLR).

The timing, size and location of the offering has not yet been determined. The shares of the company's partners span countries and continents, with Q-Cells trading on the Frankfurt market, Renewable Energy Corp., or REC, selling in Oslo, and Evergreen available on the Nasdaq.

Evergreen and Q-Cells formed EverQ in January 2005, with REC coming on board in November of that year.

Once EverQ does go public, it will start marketing its products under a new brand name. That new name hasn't been picked yet, but in the meantime, EverQ will continue to provide Evergreen-branded products to honor all current and future Evergreen customer contracts until the IPO is complete.

"Our backlog of those contracts today is currently around $1 billion," Richard Feldt, president and CEO of Evergreen, said in a conference call.

After the IPO, Evergreen and EverQ will continue to work together under a five year cross licensing agreement to share all new material technology development on Evergreen's String Ribbon platform, which Evergreen hopes to license to other companies as well.

"We believe that the solar industry will remain robust and will continue to experience rapid growth over the next several years, and that our String Ribbon technology will be a big part of that market growth, providing in excess of 1 gigawatt by 2012," said Feldt.

Evergreen said its String Ribbon wafer production process uses approximately half the silicon and avoids the sawing of conventional approaches. Evergreen plans to reach 500 MW of capacity by 2012 in its own facilities in the U.S., accounting for half of that String Ribbon use.

All of EverQ's plants use the String Ribbon process. The new plant, to be sited in Thalheim, will use Evergreen's new Quad furnace technology with automated ribbon cutting.

In Evergreen's table-top sized furnaces, long wires unwind from spools, run through the molten silicon and pull a long "ribbon" of silicon out of the melt.

The ribbon is harvested and cut into smaller pieces for further processing into solar cells. The company's Gemini II furnaces grow two 3.2 inch wide ribbons at a time, with the new Quads growing four at a time.

Take a look at a Gemini II furnace here >>

EverQ's third plant is expected to boost the venture's production capacity from approximately 100 megawatts to 180 MW. The 125 million euro facility is scheduled to open in early 2009.

Evergreen said the partners plan to expand EverQ's annual production capacity to 600 MW by 2012.

"The previous growth plan for EverQ was to reach about 300 MW by 2010, so it's a substantial increase," said Feldt.

Supporting that increase is REC, which will supply an additional 4,000 metric tonnes of polysilicon to EverQ beginning in 2010 and continuing through 2015.

Evergreen said total polysilicon volumes supplied by REC to EverQ under the current and new contracts could reach 2,100 metric tonnes per year.

The three partners signed a memorandum of understanding for an IPO for EverQ, but it's still too early to say how many shares are being sold, or who will be selling them.

"We have very little details yet to offer," said Feldt, adding that they have a lot of work to do before any more information will be available.

Evergreen said the management and organization of EverQ will be strengthened to build it into an independent company, and the sales and marketing team will be expanded.

Evergreen is doing some expansion of its own, recently breaking ground on a new 75 MW plant in Massachusetts. The new plant is expected to open in the second half of 2008 and reach full capacity in early 2009.

"We believe that in general, a site, whether it consists of two or three buildings, but a site at somewhere between 150 to 200 MW is a good size site," said Feldt.

With goals of 500 MW at Evergreen and 600 MW at EverQ, more plants are expected at both companies.

Feldt said it's likely that EverQ will look around and decide that "Germany's a great market to be in but not the only market," and could locate some plants in other countries.

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