REC stops funding for REC Wafer pushing it into insolvency
Aug 14, 2012 - Norwegian solar equipment maker Renewable Energy Corp ASA (OSL:REC) said Tuesday it had decided to stop providing funding for its unit REC Wafer Norway AS, thus forcing the latter to file for bankruptcy.
REC Wafer Norway permanently closed its production facilities in Glomfjord and at Heroya in 2011 and 2012, respectively, and commenced wind-up activities.
The company said that REC Wafer’s liabilities exceeded its assets by NOK 1.2 billion (USD 203m/EUR 164m) as of July 30, 2012. Therefore, the unit could not remain solvent without continued funding from its parent.
Last month, REC’s bondholders released REC Wafer as a guarantor under REC’s existing bonds and convertible bond programmes. In addition, the subsidiary is not a guarantor under the parent company’s new bank loan agreement which entered into force on August 10, 2012.
As a result of REC Wafer’s bankruptcy, REC will record around NOK 400 million worth of costs and further losses related to guarantees, loans and indemnity agreements.