Tuesday, September 16, 2008

SunPower and Evergreen - Bit by Lehman

So in my previous post I mentioned Evergreen's exposure to Lehman. Apparently, SunPower will have similar issues, though not as grave. Quoted from MarketWatch:

"Concurrently with our February 2007 offering of $200 million principal amount of 1.25% senior convertible debentures due 2027, we lent 2.9 million shares of our class A common stock to LBIE. The lent shares were to be used by Lehman Brothers Inc., the underwriter in the offering and an affiliate of LBIE, to facilitate the establishment by investors of hedged positions in our class A common stock. We did not receive any proceeds from our lending of class A common stock to LBIE, but we received a nominal lending fee of $0.001 per share.


While the share lending agreement does not require cash payment upon return of the shares, physical settlement is required (i.e., the loaned shares must be returned to us at the end of the arrangement). In view of this and the contractual undertakings of LBIE in the share lending agreement, which have the effect of substantially eliminating the economic dilution that otherwise would result from the issuance of the borrowed shares, to date the borrowed shares have not been considered outstanding for the purpose of computing and reporting our earnings per share. Excluding the 2.9 million class A shares lent to LBIE, as of August 29, 2008 we had 85,739,000 shares of common stock issued and outstanding, comprised of 43,705,713 shares of class A common stock and 42,033,287 shares of class B common stock."

SunPower is one of my largest holdings, and though yesterday it sank to 52-week lows, today it has rallied - and I expect it to continue to rise, as Lehman's bankruptcy will not affect it as strongly as it will affect Evergreen.

My holdings of Evergreen, on the other hand, are not faring well.

I will stay the course - at this point, I don't have much more to lose.

Stay true in these dark days,

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