8-KMaterial AgreementsFinancial EventsExhibits & Filings

FIRST SOLAR, INC. 8-K Report, Material Agreement (May 24, 2011)

Filed May 24, 2011For Securities:FSLR

Summary

First Solar, Inc. (FSLR) announced via an 8-K filing on May 24, 2011, the entry into a significant financing agreement for its European expansion. On May 18, 2011, its indirect wholly owned subsidiary, First Solar Manufacturing GmbH, secured a EUR 124,500,000 Credit Facility Agreement. This facility is earmarked to finance the acquisition of land and the construction of a new thin-film solar module production facility in Frankfurt/Oder, Germany, referred to as the FFO2 Production Facility. The financing structure includes guarantees from First Solar, Inc. itself, as well as from the German Federal Government and the Federal State of Brandenburg, indicating strong governmental support for this strategic investment. The credit facility carries a variable interest rate tied to EURIBOR plus a margin, with fees on unutilized commitments. The agreement outlines terms for repayment, restrictions on the borrower's activities through negative covenants, and financial covenants related to liquidity and leverage.

Key Highlights

  • 1First Solar's German subsidiary secured a EUR 124.5 million credit facility to fund land acquisition and construction of a new manufacturing plant in Frankfurt/Oder, Germany.
  • 2The new facility, named the FFO2 Production Facility, will focus on producing thin-film solar modules.
  • 3The credit agreement includes a guarantee from the parent company, First Solar, Inc.
  • 4Significant governmental support is evidenced by guarantees from the German Federal Government and the Federal State of Brandenburg.
  • 5Borrowings under the credit facility are secured by land charges and pledges, with repayment terms including voluntary prepayments and mandatory prepayments for certain events.
  • 6The credit agreement imposes various restrictive covenants on the borrower, including limitations on debt, liens, asset sales, dividends, and acquisitions.
  • 7Key financial covenants related to minimum liquidity, maximum leverage ratio, and minimum EBITDA are included in the agreement.

Frequently Asked Questions

The EUR 124,500,000 credit facility is intended to finance and/or refinance the acquisition of land parcels in Frankfurt/Oder, Germany, and the subsequent construction of a new thin-film solar module production facility, known as the FFO2 Production Facility.

The financing is provided by a syndicate of finance parties, with Commerzbank Aktiengesellschaft acting as the arranger, facility agent, and security agent. The loan is guaranteed by First Solar, Inc. (the parent company), the German Federal Government, and the Federal State of Brandenburg.

The credit agreement bears interest at a rate of EURIBOR plus a 1.35% margin, with fees on unutilized commitments. The borrower can voluntarily repay loans without penalty (subject to break costs) and is required to prepay with proceeds from certain asset sales or insurance. The agreement also contains negative covenants restricting the borrower's actions (e.g., incurring debt, asset sales) and financial covenants requiring minimum liquidity, maximum leverage, and minimum EBITDA.

The loans are secured by a first-ranking abstract land charge over the land for the FFO2 Production Facility and a pledge of a debt service reserve account. The company's guarantee and governmental guarantees also provide additional security.