8-KMaterial AgreementsFinancial EventsExhibits & Filings

FIRST SOLAR, INC. 8-K Report, Material Agreement (May 12, 2008)

Filed May 12, 2008For Securities:FSLR

Summary

First Solar, Inc. (FSLR) has entered into a material definitive agreement through its indirect wholly owned subsidiary, First Solar Malaysia Sdn. Bhd., securing export financing facilities totaling up to €133.96 million (approximately $206.3 million) on May 6, 2008. These facilities are specifically designated for partially financing the purchase of equipment for its Malaysia Project in the Kulim Hi-Tech Park, Malaysia, and related fees to Euler Hermes, the German Export Credit Agency. The financing consists of both fixed and floating rate Euro-denominated term loans, with interest rates at 4.54% for fixed rate facilities and EURIBOR plus 0.55% for floating rate facilities. This financing is crucial for the expansion of First Solar's manufacturing capacity in Malaysia, a key component of its growth strategy. The agreement includes repayment terms of 14 semi-annual installments, commencing after the related plant becomes operational. The company's obligations are guaranteed by First Solar, Inc. on an unsecured basis, and the financing is secured by a charge over the purchased equipment. This move underscores First Solar's commitment to scaling its operations to meet anticipated demand.

Key Highlights

  • 1First Solar's Malaysian subsidiary secured export financing facilities of up to €133.96 million (approx. $206.3 million).
  • 2The funds are earmarked for the purchase of equipment for the Malaysia Project and related fees for the German Export Credit Agency (Euler Hermes).
  • 3The financing comprises two types of Euro-denominated facilities: fixed-rate loans at 4.54% and floating-rate loans at EURIBOR + 0.55%.
  • 4Repayment of the loans will be made in 14 semi-annual installments.
  • 5First Solar, Inc. provided an unsecured guarantee for the facility agreement.
  • 6The financing is secured by a charge over the equipment to be purchased for the Malaysian plants.
  • 7The agreement includes customary covenants and financial covenants related to debt to equity, EBITDA, interest coverage, and debt service ratios.

Frequently Asked Questions

The export financing facility is intended to partially fund the purchase of essential equipment for First Solar's plant expansion project in Malaysia (the 'Malaysia Project') and to cover fees associated with the German Export Credit Agency (Euler Hermes) which is guaranteeing the obligations.

The facility offers both fixed-rate credit facilities with an interest rate of 4.54% and floating-rate credit facilities at a rate of EURIBOR plus a 0.55% margin. The total credit available is up to €133.96 million. Repayments are structured in 14 semi-annual installments.

First Solar, Inc. acts as a guarantor for its Malaysian subsidiary, First Solar Malaysia Sdn. Bhd., providing an unsecured guarantee for the obligations under the Facility Agreement. This means First Solar, Inc. is ultimately responsible for the debt if the subsidiary cannot fulfill its obligations.

Key risks include potential acceleration of debt if the Hermes Guarantee is withdrawn or invalidated, covenant defaults (including financial covenants), a cross-default to other debt, a change of control of the subsidiary, or any material adverse effect. The financing is also subject to German law.