Sandvika, June 5, 2009; REC will at the Extraordinary General Meeting ("EGM") today propose to raise equity in the amount of NOK 4.5 billion, which is NOK 0.5 billion higher than previously announced. Further, the subscription period will be postponed by approximately three weeks and subscription is anticipated to take place between June 29 and July 13.
As stated in the report for the first quarter 2009, the demand for solar products is currently weak due to the increased economic uncertainty and low availability of financing for new investment projects. A lower level of solar installations has reduced the demand and prices for solar modules, which in turn has started to affect the supply and demand balances and prices further up the value chain.
The weakening of the market has continued. As previously announced, REC faces a reduced demand for modules and an increasingly difficult market for wafers, which has led to reduced production and temporary lay-offs both in REC Wafer and REC Solar. It should also be expected that the production facilities within REC Solar will continue to operate below full capacity also into the third quarter.
Further, REC has continued to make analysis and inspection work related to its deliveries of solar modules with possibly malfunctioning junction boxes. These findings indicate that the one-off provision (non-recurring item) for costs associated with the repair work need to be increased by approximately NOK 300 million. This provision will be made in the second quarter of 2009.
The Singapore project continues to trend towards a lower capital expenditure compared to the initial investment case, reflecting a less heated construction market.
The long term fundamentals of the PV industry remain, in our view, intact with return on investments in solar systems reaching record high levels, mainly due to a significant decrease in the price of solar modules. The economic stimulus packages, especially in the US, are expected to have a positive impact on the PV market. However, it will take some time before the policies implemented materialize as increased demand.
Based on an overall assessment of the current financial situation, and in order to ensure sufficient financial flexibility, the Board of Directors in REC intends to propose at the EGM today to raise equity in the amount of NOK 4.5 billion, which is NOK 0.5 billion higher than previously announced.
Due to the complexity of and interdependency between the transactions involving both equity and loans, it will take more time than originally anticipated to finalize all terms and conditions of such agreements and secure full underwriting. As a result, the subscription period will be postponed by approximately three weeks, and subscription is anticipated to take place between June 29 and July 13. The subscription price will be determined and announced on or about June 22. The last day of trading of the share inclusive the subscription rights will be June 22.
The proposed resolution will consequently have to be adapted to the new time schedule. The Board will therefore propose to the EGM that the implementation of the rights issue shall be contingent on underwriting agreements being entered into. Such agreements will ensure that the rights issue will be fully underwritten.
These matters will be further presented in details in a prospectus that is intended to be released on or about June 29, 2009.
For more information, please contact;
Jon André Løkke, SVP & Investor Relation Officer, +47 907 44 949
REC is the leading vertically integrated player in the solar energy industry. REC Silicon and REC Wafer are among the world's largest producers of polysilicon and wafers for solar applications, and REC Solar is a rapidly growing manufacturer of solar cells and modules. REC Group had revenues of NOK 8,191 million and an operating profit of NOK 2,529 million in 2008. About 2,500 employees work in REC's worldwide organization. Please also see www.recgroup.com
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