8-KMaterial AgreementsFinancial EventsExhibits & Filings

FIRST SOLAR, INC. 8-K Report, Material Agreement (Jul 7, 2011)

Filed July 7, 2011For Securities:FSLR

Summary

First Solar, Inc. (FSLR) announced through its indirect wholly owned subsidiary, First Solar Malaysia Sdn. Bhd., the entry into a significant financing agreement on June 30, 2011. This facility agreement, denominated in Malaysian Ringgit and equivalent to US$150,000,000, is intended to fund a substantial portion of the design, construction, and commissioning of the company's fifth and sixth manufacturing plants in Malaysia, along with the acquisition of associated plant, equipment, and machinery. The financial obligation is secured by charges over the Borrower's leases and the plant, equipment, and machinery acquired with the facility proceeds. Notably, First Solar, Inc. itself is providing an unsecured guarantee for its subsidiary's obligations under this agreement. The terms include interest based on KLIBOR plus mandatory costs, with provisions for voluntary and mandatory prepayments under certain conditions, such as change of control or asset disposals. The agreement also imposes several financial and negative covenants on the borrower, which are standard for such credit facilities.

Key Highlights

  • 1First Solar's Malaysian subsidiary secured a US$150 million equivalent Ringgit Malaysia-denominated facility agreement.
  • 2Proceeds are designated for the construction and equipping of two new manufacturing plants in Malaysia (Plants 5 and 6).
  • 3First Solar, Inc. is providing an unsecured corporate guarantee for the subsidiary's borrowings.
  • 4The facility is secured by charges on the subsidiary's leases and acquired plant/equipment.
  • 5Interest rate is based on KLIBOR plus mandatory costs.
  • 6The agreement includes provisions for voluntary and mandatory prepayments.
  • 7Negative and financial covenants are in place, restricting the borrower's actions and requiring adherence to financial ratios.

Frequently Asked Questions

The US$150 million equivalent facility agreement is intended to partially finance the design, construction, and commissioning of First Solar's fifth and sixth manufacturing plants in Malaysia, as well as the acquisition of related plant, equipment, and machinery for these facilities.

The direct borrower is First Solar Malaysia Sdn. Bhd., an indirect wholly owned subsidiary of First Solar, Inc. However, First Solar, Inc. is providing an unsecured corporate guarantee for its subsidiary's obligations under the facility agreement.

The agreement includes negative covenants that restrict the borrower's ability to incur additional debt, create liens, sell assets, and engage in certain reorganizations. It also contains financial covenants related to leverage, interest coverage, debt-to-equity ratios, debt service coverage, and tangible net worth. The loans are secured by specific assets and are subject to mandatory prepayments under certain events.

Borrowings under the facility are expected to bear interest at a rate per annum equal to the KLIBOR rate for Ringgit Malaysia deposits plus any mandatory costs. The specific KLIBOR rate is determined by reference to the Reuters screen.