REC's bondholders greenlight split

Aug 27, 2013 - The bondholders of Norwegian firm Renewable Energy Corp ASA (OSL:REC) have given the green light to the company’s planned split, the solar panel and polysilicon maker said Tuesday.

The approval hinges on REC competing the recently announced senior bond buyback.

Under a proposal from mid-July, REC will spin off its solar arm REC Solar and run it as an independent Singapore-based entity listed on the Oslo Stock Exchange. As part of the plan, existing REC shareholders will be offered corresponding stakes in the new solar company. The fully underwritten offering values REC Solar ASA at NOK 800 million (USD 132m/EUR 99m).

REC explained that it is getting more and more demanding to expand in a fully vertically integrated business model, adding that at present there were only limited operational synergies between its silicon and solar segments. The company will hold an extraordinary general meeting on September 23 on which shareholders will vote on the proposed split, which also needs the nod by Singaporean authorities. The subscription period for REC Solar is to commence around September 26, with each 58 shares held in REC giving shareholders the right to subscribe for one REC Solar share at a subscription price of NOK 20 per share. The Oslo listing is expected to become a fact around October 18.

Once the spin-off is completed, the polysilicon business will operate under a different name and brand. REC will use the proceeds to strengthen its balance sheet. The company said it expected to book a loss of NOK 1.3 billion as a result of higher book value prior to the transaction. Calculations are preliminary.

(NOK 10 = USD 1.651/EUR 1.238)

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