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First Solar looking to raise $450M in public offering of stock (updated)

12 Jun 2013

Share price has quadrupled in value over past year.

Thin-film photovoltaics giant First Solar looks set to raise around $450 million to help fund its planned future expansion after announcing an underwritten public offering of its common stock.

The Tempe, Arizona, company is planning to sell 8.5 million new shares, taking advantage of a stock price that has risen from just $12 a year ago to trade at more than $50 in recent weeks.

At current prices, the company stands to raise around $450 million, although the exact pricing remains to be confirmed* and First Solar’s stock slipped back by more than 6% during trading on June 11, after which the offering was announced.

Underwriting the offering are a “who’s who” of global financial institutions, with J.P. Morgan Securities, Morgan Stanley, BofA Merrill Lynch, Citigroup Global Markets, Credit Suisse, HSBC, Credit Agricole and Goldman Sachs all acting as joint book-running managers.

First Solar wants the additional funds to help support its transition into “sustainable” markets for photovoltaic energy generation, and away from the government-subsidized schemes that have created the existing industry.

One of the keys to achieving that is to develop cheaper and more efficient PV cells and modules. First Solar has historically worked solely on cadmium telluride (CdTe) thin-film cells, though it recently signalled its intentions to move beyond that material with the acquisition of TetraSun, a San Jose, California, start-up specializing in high-efficiency crystalline silicon material that can – in theory - be produced more cheaply than rival approaches.

Strategic plan
In its prospectus for the new offering, First Solar said: “In May 2012, we provided information regarding our long term strategic plan to transition our business to primarily sustainable opportunities by the end of 2016."

"In executing the plan, we are focusing on providing photovoltaic solar power system solutions using our modules to sustainable geographic markets that we believe have a compelling need for mass-scale photovoltaic electricity, including markets throughout the Americas, Asia, the Middle East, and Africa.”

“As part of our plan, we are focusing on opportunities in which our photovoltaic solar power systems will compete directly with fossil fuel offerings on a levelized cost of energy basis. We are focusing our resources in those markets and energy applications in which photovoltaic solar power can be a least-cost, best-fit energy solution, particularly in regions with high solar resources, significant current or projected electricity demand and/or relatively high existing electricity prices.”

Meeting those goals is going to require a re-allocation of the company’s resources around the globe, and in particular will demand a greater presence in regions where First Solar has not traditionally conducted any major business.

“We expect joint ventures or other business arrangements with strategic partners to be a key part of our plan and related strategy, and we have begun initiatives in several markets using such arrangements to expedite our penetration of those markets,” noted the firm.

As well as the potential addition of $450 million or more to an existing cash balance of $843 million (as of March 31), First Solar is also looking to extend an existing $600 million credit facility to support the next phase of its growth. It wants to extend the maturity date of the credit line to July 2018 for existing lenders by expanding the collateral on which it is secured.

* update (June 13): First Solar has subsequently priced the offering at $46 per share, a figure that would equate to $391 million, not including any additional options available to the underwriters.

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