Høvik, 6 June 2006
Renewable Energy Corporation ASA (REC) has today entered into a binding Memorandum of Understanding to increase its shareholding to 33.33 % and become an equal partner in EverQ - a joint venture between Evergreen Solar Inc., Q Cells AG and REC. As part of the agreement, REC will also sign a long-term polysilicon supply agreement with EverQ.
In the original joint-venture agreement, REC had an option to increase its shareholding from the current 15 % to 33.33 %, provided the parties would enter into a long-term polysilicon supply agreement. Through the new agreement, REC, Evergreen Solar Inc. and Q Cells AG will become equal partners in the venture. REC will in addition to the supply agreement pay approximately USD 49 million for the increased shareholding.
'As a result of our recently announced investment in additional polysilicon production capacity we are now able to offer EverQ a long-term supply contract and further build our position across the industry value chain. Their so called ''String-Ribbon" wafer technology has a significant benefit from high purity granular polysilicon, which is exactly what we will produce at our new plant using REC's proprietary technology', says Erik Thorsen, President and CEO of REC ASA.
The agreement calls for REC to supply EverQ with a total of 7,400 metric tons of granular polysilicon over seven years. Shipments are expected to begin in the second half of 2008 and gradually increase to a maximum of 1,200 metric tons annually from 2010 through 2014. This additional polysilicon is planned to fuel further expansions of up to 300 MW in EverQ in 2010, possibly within the second half of 2009. EverQ will on signing the long-term polysilicon supply agreement pay a sign-on fee of USD 42 million in addition to a prepayment of USD 45 million. The final location(s) of the new expansions is not yet decided upon.
REC and Q-cells will under the new agreements each make available an additional 150 metric tons of polysilicon to EverQ from mid 2007 to mid 2008 at short term market prices. This interim supply gives EverQ the opportunity to expand its Thalheim operations with the construction of a second integrated wafer, cell and module factory with a capacity of approximately 50MW. Subject to final approval of investment grants, construction of this facility is anticipated to commence in the third quarter of 2006. Production is expected to begin in the first half of 2007 and reach full capacity by year-end 2007.
'The supply agreement is consistent with our overall plan of primarily using our polysilicon capacity for internal growth and towards value creation in strategic partnerships - like EverQ,' comments Erik Thorsen.
The new joint-venture agreement should allow REC to consolidate 33.33 percent of the company's financial results. It is expected that total revenues in EverQ at full capacity will represent approximately NOK 6-7 billion, based on 2006 market pricing (according to Marketbuzz 2006).
EverQ was established at the beginning of 2005 as a joint-venture between Q-Cells AG of Germany and Evergreen Solar, Inc. of the USA. In November 2005, REC became the third partner in this company. EverQ currently is ramping up a manufacturing plant for solar wafers, cells and modules in Thalheim with an annual production capacity of 30 MW. The String Ribbon technology has a significant benefit from an ultra-pure (electronic grade) feedstock of the granular shape, and has the potential to use approximately half of such silicon than the sawn wafer technologies.
REC is uniquely positioned in the solar energy industry as the only company with a presence across the entire value chain. REC Silicon and REC Wafer are the world's largest producers of solar grade silicon and wafers for solar applications. REC Solar produces solar cells at its plant in Norway and solar modules at its facility in Sweden. REC Group had revenues in 2005 of 2.454 MNOK and an operating profit of 601 MNOK. Please see also www.recgroup.com
For further information please contact:
Erik Thorsen, President & CEO of REC, +47 90 75 66 85
Jon André Løkke, SVP & Investor Relation Officer, +47 67 81 52 65