Energy Conversion Devices Announces Offering Of Common Stock & Convertible Senior Notes; Share Lending Arrangement

June 12, 2008 by Jeff Shepard

Energy Conversion Devices, Inc. announced that it has filed preliminary prospectus supplements with the Securities and Exchange Commission relating to proposed public offerings of 4,708,500 shares of common stock and $225 million aggregate principal amount of Convertible Senior Notes due 2013. The company intends to grant the underwriters of the proposed offering of common stock an option to purchase up to an additional 190,500 shares of common stock, and to grant to the underwriters of the proposed offering of notes an option to purchase up to an additional $33.75 million aggregate principal amount of notes.

The interest rate, conversion rate, conversion price and other terms of the notes will be determined at the time of the pricing of the offering. The notes will be senior unsecured obligations and will rank equal in right of payment with any future senior unsecured debt, and senior in right of payment to all of the company’s existing and future debt, if any, that is subordinated to the notes.

Concurrently with this offering of the notes, Energy Conversion Devices is offering 4,708,500 shares of its common stock. Of these, 3,438,500 shares will be lent by the company to Credit Suisse International, or CSI, an affiliate of Credit Suisse Securities (USA) LLC, pursuant to a share lending agreement among Energy Conversion Devices, Credit Suisse Securities (USA) LLC and CSI. Under that agreement, CSI will be entitled to offer and sell such shares pursuant to the equity prospectus supplement and will agree to use the sale of such offered shares to facilitate the establishment of hedge positions by investors in the notes offered and potentially other securities. CSI will receive all of the proceeds from the share lending arrangement. Energy Conversion Devices will not receive any of the proceeds from the share lending arrangement but will receive a nominal lending fee. The completion of the lending of shares pursuant to the share lending arrangement is conditioned on completion of the convertible notes offering.

While the borrowed shares will be considered issued and outstanding for corporate law purposes, because the shares lent pursuant to that agreement must be returned to Energy Conversion Devices prior to June 15, 2013, the company believes that under U.S. generally accepted accounting principles, the borrowed shares will not be considered outstanding for the purpose of computing and reporting earnings per share.

Energy Conversion Devices intends to use the net proceeds from the offering of convertible notes and the underwritten equity offering for the expansion of its solar laminate production in connection with its plan to reach 1 GW of capacity by 2012 and for general corporate purposes.