Evergreen Solar stock drops over Lehman Brother bankruptcy

Evergreen Solar (ESLR, the company) closed Friday September 12th at a price of $6.30. Solar stocks were hit heavily on the drop of oil prices. To make matters worse for ESLR, Lehman Brothers filed for bankruptcy over the weekend. Lehman was the underwriter for $373 million of convertible senior notes payable in 2013. There are currently 164 million shares outstanding, so a substantial amount is held at Lehman. ESLR has no obligation to Lehman Brothers, but may suffer the consequences of not having the loaned shares returned. This transaction involved a lending agreement with Lehman where ESLR loaned 30.9 million outstanding shares to Lehman with the expected return of the shares by 2013, when the notes are due. The cash from the senior notes is currently held by ESLR, but the company now has the right to have the loaned shares returned or have the current market value paid back by Lehman. This will obviously be difficult due to the bankruptcy filings.
According to the conference call, Lehman Brothers was notified to return the shares to Evergreen Solar. There are many possible outcomes to this situation, but if Lehman Brothers falls into bankruptcy protection, Evergreen Solar would have to deal with creditors in order to get their shares returned. The shares are still considered on loan until 2013 and not part of outstanding shares on the market, thus will not be displayed on the accounting statements until that time.
As poor market conditions were pulling ESLR down to what seemed like a good buy point last week, something unforeseen happened driving the stock prices down to below $4. It is very hard to state at this point whether or not the stock is at a buy point. The Lehman bankruptcy could significantly hurt the company financially, but there may be claims to Lehman assets as the company enters bankruptcy. The course of these events will unfold over the next few months, providing more insight on the financial condition of Evergreen Solar.