REC proposes separation of REC Silicon and REC Solar

Sandvika, Norway - July 18, 2013: REC (Renewable Energy Corporation ASA), a leading global provider of solar electricity solutions, announces that it proposes to separate its silicon and solar businesses.

  • REC will establish REC Solar as an independent listed company
  • REC will offer all shares in REC Solar to REC shareholders
  • An offering of the shares in REC Solar, valued at NOK 800 million, has been underwritten by the largest shareholders of REC
  • All REC ASA shareholders will receive non-tradable subscription rights in REC Solar
  • Shareholders are also invited to join the guarantee consortium
  • Both companies will improve their financing, with REC Solar being established as a debt-free leading provider of solar panels and solutions

The transaction
The Board of Renewable Energy Corporation ASA (REC) has decided to call for an Extraordinary General Meeting (EGM) to consider a separation of REC Solar from REC. It will be proposed that REC shareholders are offered to purchase the shares of REC Solar in an oversubscribed and fully underwritten offering (the "Offering"), valuing the equity of REC Solar at NOK 800 million. REC Solar will seek listing on the Oslo Stock Exchange.

All shareholders in REC as of the date of the EGM will receive non-tradable subscription rights to their portion of the shares of REC Solar. They will thus be able to maintain the same ownership stake in REC Solar as they currently hold in REC. Oversubscription will not be possible, but a syndicate established by some of REC's largest shareholders guarantees subscription for any shares in REC Solar not subscribed in the Offering. Companies controlled by or parties related to Jens Ulltveit Moe (44 percent), QVT (20 percent), member of the REC board Øystein Stray Spetalen (15 percent), Skagen (10 percent), Datum AS (7 percent) and Holberg (4 percent) have committed to guarantee 100 percent of the offering and will following sub-guarantee syndication be entitled to guarantee at least 75 percent of the full NOK 800 million placement.

25 percent of the underwriting guarantee will be offered as sub-underwriting to all REC shareholders, who must register their commitments before the close of business on July 22, 2013. Sub-underwriters will be required to underwrite at least NOK 4 million each, and commitments may be reduced relative to their shareholdings and otherwise on a pro rata basis if the guarantee syndicate is oversubscribed.

A prospectus describing REC Solar is being prepared, and will be published prior to the subscription period for the Offering, expected to commence towards the end of September. REC shareholders will be notified of their subscription rights in conjunction with the Offering. REC shareholders will receive the right to subscribe for one new share in REC Solar for each 58 shares they hold in REC at the EGM date and the subscription price will be NOK 20 per share.

The industrial rationale
Solar is an industry in strong growth and is becoming an increasingly competitive source of energy. The industry is, however, immature, fragmented and weakly capitalized, and ripe for significant consolidation. REC recognizes that it is increasingly demanding to grow and maintain a leading position in a fully vertically integrated business model. There are only limited operational synergies between the Silicon and Solar divisions today.

The transaction will allow the two companies to follow separate consolidation paths as industry leaders in their fields. It also ensures a fundamentally solid financial base for both companies.

REC Solar
REC Solar is a leading provider of solar panels and solutions. It has a proven track record of cost reduction and high product quality, and will continue to invest in the implementation of new technology.

Figures released in the quarterly statement of REC today indicate that the current spot price is above the Q2 2013 cash cost for REC Solar, with revenues of NOK 1,070 million and an EBITDA of NOK 75 million. Cell efficiency has increased steadily, solar panel costs continue to come down, and sales volumes were up 24 percent from Q1 2013, with selling prices increasing six percent. The company has a strong market position in Europe and Asia, and will be headquartered in Singapore under CEO Øyvind Hasaas.

REC will provide REC Solar with a NOK 300 million net cash position, as of June 30, 2013. It will have an additional undrawn credit facility of NOK 200 million from REC, to potentially be replaced by third party financing. With a pro forma equity ratio of 67 percent, REC Solar will at the time of listing have a debt free financial base. This will allow for growth and further investment in new technology.

REC parent company
REC will after completion of the Offering continue its other current operation in the polysilicon business. REC has an industry-leading cost position based on proprietary technology for the production of granular polysilicon. It provides a diversified product offering through electronic grade and float zone polysilicon as well as silane gas.

REC will receive the net sales proceeds from the Offering and thus strengthen its own balance sheet following completion of the transaction. Provided that the Solar operation is held for sale or disposed of, REC expects in the third quarter 2013 to report its Solar operations as discontinued operations and recognize a loss of about NOK 1.3 billion. The amounts are preliminary and subject to changes.

REC will post transaction have a pro forma nominal net debt of NOK 1.7 billion and a pro forma equity ratio of 53 percent. REC currently has an undrawn bank credit facility of NOK 400 million and a guarantee facility of NOK 400 million, both maturing in April 2014. The transaction will require bondholder approval, and bondholder meetings will be called as soon as it is practicable.

Timeline

  • Sub-underwriting will be accepted from today to the end of business on July 22.
  • A bondholder meeting will be called for in due course and is expected to be held in August 2013.
  • An EGM in REC will be called for in due course, and is expected to be held in August 2013.
  • Subscription rights are expected to be received by those who are REC shareholders on record as of the EGM date.
  • The subscription period is expected to run for two weeks and end in October 2013; with the first day of listing shortly after the completion of the transaction.

             
The transaction will require approval by Singaporean authorities, and REC Solar will need approval for listing by the Oslo Stock Exchange.

Actions to be taken by shareholders
Invitations to the EGM will be sent to all shareholders shortly. Shareholders will also receive a prospectus for the proposed offering, and will be allocated subscription rights following the EGM. REC shareholders do not need to act prior to the subscription period for the Offering in September-October in order to use these subscription rights.

The right to participate in the Offering and sub-underwriting consortium will be subject to customary selling and transfer restrictions.

Arctic Securities is acting as sole adviser and manager of the offering. Shareholders in REC who wish to participate in the sub-underwriting should contact Arctic Securities by telephone (+47 21 01 31 52 / + 47 21 01 30 00) to be given a copy of the documentation available to underwriters, including a term sheet. Underwriting will commence immediately, and be accepted until 16:30 CET on July 22.

Further information
Further information about the transaction and its financial consequences are available in an investor presentation attached to this press release and at www.recgroup.com/offering2013.

For additional information, please contact:

Kjell Christian Bjørnsen
EVP & CFO, REC
Telephone: + 47 917 02 097
Email: kjell.bjornsen@recgroup.com

Mikkel Tørud,
SVP Investor Relations & Business Development, REC
Telephone: +47 976 99 144
Email: mikkel.torud@recgroup.com

Important notice:

This announcement is not an offer for sale of securities in the United States or any other country in which such offer would be unlawful or would require prospectus, registration or other measures. The securities referred to herein have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be sold in the United States absent registration or pursuant to an exemption from registration under the U.S. Securities Act. REC does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into the United States, Canada, Australia, Hong Kong, Japan or any other jurisdiction in which such distribution would be unlawful or would require registration or other measures.

In any EEA Member State that has implemented Directive 2003/71/EC (together with any applicable implementing measures in any member State, the "Prospectus Directive"), this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive.

This announcement is only directed at (a) persons who are outside the United Kingdom; or (b) investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (c) persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc.") of the Order; or (d) persons to whom any invitation or inducement to engage in investment activity can be communicated in circumstances where Section 21(1) of the Financial Services and Markets Act 2000 does not apply.

Certain statements included within this announcement and its appendix contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for REC, such as planned expansions, investments or other projects, (c) costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in REC's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well  as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. No assurance can be given that such expectations will prove to have been correct. REC disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About REC
REC is a leading global provider of solar electricity solutions. With nearly two decades of expertise, we offer sustainable, high-performing products, services and investment opportunities for the solar and electronics industries. Together with our partners, we create value by providing solutions that better meet the world's growing electricity needs. Our 2,300 employees worldwide generated revenues of more than NOK 7 billion in 2012, approximately EUR 1 billion or USD 1.3 billion.

To see more of what REC can offer, visit www.recgroup.com.

This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian SecuritiesTrading Act.

REC Solar ASA investor presentation
Attachments:
REC Solar ASA investor presentation