Remember those tens of millions of shares that Lehman Brothers held in solar companies as part of convertible bond deals it underwrote? It seems Barclays PLC ended up holding them after it bought Lehman’s broker dealer business following the U.S. investment bank’s bankruptcy.
A couple of weeks ago, Barclays filed notice with the SEC to disclose that it now owned sizeable stakes of Evergreen Solar (s ESLR), SunPower (s SPWRA) and JA Solar (s JASO), which meant it was in a position to sell all of them into the open market and dilute the stocks just when the solar industry is facing what the New York Times called “big new challenges.”
Today, Evergreen shot back by filing a lawsuit against Barclays to get its shares back.
In an unusually impassioned press release, Evergreen said it was “outraged” that Lehman sold the 12.2 million shares to Barclays and “demands immediate return” of the stock. The company said:
“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.
It’s not clear how strong a case Evergreen has — that depends on the wording of a contract that was written when no one at Lehman imagined the company would actually go bankrupt. The Wall Street Journal reports that the high-profile demands are coming after a couple weeks of negotiations that apparently broke down.
Evergreen’s lawyers told lawyers for Barclays that Barclays obtained the shares in violation of Evergreen’s agreement with Lehman. Barclays disagreed, according to Evergreen. Mr. El-Hillow said they tried to convince Barclays otherwise to “no avail,” and then filed the lawsuit.
The Evergreen press release said the company expressed willingness to work with Barclays as an investment banking client, but Barclays showed no interest. That says something about the prospects of solar companies trying to raise more capital in this market.
Evergreen’s stock fell 10 percent to $3.23 Monday, whlile SunPower dropped 9 percent and JA Solar fell only 1 percent. Since Lehman collapsed, the three solar stocks are down, respectively, 48 percent, 41 percent and 50 percent.