Senior bond holders approve the proposed split of REC

Sandvika, August 27, 2013: Bondholders' meetings for the REC01, REC02 and REC03 bonds were held today. Required quorum was obtained and the bondholders in all bonds approved the proposed split of the company. The approval is contingent upon REC carrying out the proposed offer to buy back senior bonds as per the company announcement on August 23, 2013.

The bondholders' approval is an important step in the process of separating REC's silicon and solar businesses as announced on July 18, 2013:

  • REC will establish REC Solar ASA as an independent listed company 

  • REC shareholders will be offered non-tradable subscription rights in REC Solar ASA 

  • The offering of 100 percent of the shares in REC Solar ASA, valued at NOK 800 million, has been underwritten by the largest shareholders of REC 

  • Both companies will improve their financing, with REC Solar ASA being established as a debt-free leading provider of solar panels and solutions 

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. Only limited operational synergies exist 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, while ensuring a solid financial base for both companies.

The transaction

REC will soon call for an Extraordinary General Meeting (EGM) to approve the separation. It will be proposed that REC shareholders are offered to purchase the shares in REC Solar ASA in a fully underwritten offering (the "Offering"), valuing the equity of REC Solar ASA at NOK 800 million. The new company will apply for listing on the Oslo Stock Exchange shortly.

All shareholders in REC as of the date of the EGM will receive non-tradable subscription rights proportional to their shareholding in REC. Oversubscription will not be possible. The shareholders will thus be able to maintain the same ownership stake in REC Solar ASA as they currently hold in REC.

A prospectus describing REC Solar ASA is being prepared and will be published prior to the subscription period for the Offering which is expected to commence towards the end of September.

REC shareholders will be notified of their subscription rights in conjunction with the Offering. For each 58 shares held in REC at the EGM date, shareholders will receive the right to subscribe for one new share in REC Solar ASA, and the subscription price will be NOK 20 per share.

REC Solar ASA - the new company

REC Solar ASA will be 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. The company has a strong market position in Europe and Asia will be led by CEO Øyvind Hasaas and headquartered in Singapore.

REC will provide REC Solar ASA with a NOK 300 million net cash position, calculated 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. REC Solar ASA will have a debt free financial base at the time of listing. This will allow for growth and further investments in new technology.

REC - the parent company

REC will after completion of the Offering continue its other current operation in the polysilicon business under a new name and brand. REC has an industry-leading cost position based on proprietary technology for the production of granular polysilicon, and also 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 balance sheet following the completion of the transaction. REC expects to report its Solar operations as discontinued operations in the third quarter 2013 and recognize a loss of about NOK 1.3 billion due to higher book value prior to the transaction. The amounts are preliminary and subject to changes.

REC will post transaction have a pro forma nominal net debt of NOK 1.7 billion.

Timeline

  • EGM to approve to separation to be held on or about September 23, 2013. 

  • Subscription rights to be received by those who are REC shareholders on record as of the EGM date. 

  • The subscription period for the REC Solar ASA offering to start on or about September 26 and end on or about October 10, 2013  

  • REC Solar listing expected to occur on or about October 18, 2013 

  • The transaction will require approval by Singaporean authorities, and the new company will need approval for listing by the Oslo Stock Exchange 

  • Subsequent to the listing, the announced bond buy backs in REC01, REC02 and REC03 will be carried out. 

Actions to be taken by shareholders

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

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

Arctic Securities is acting as sole adviser and manager of the offering.

The Company will cover external attorney fees reasonably incurred by bond holders in direct connection with the bondholder meetings on August 27, up to a total amount of 200 000 NOK. If total claims exceed this limit, REC will adjust reimbursement in proportion to number of bonds held. Documentation of fees incurred, including scope of work, copies of invoices and documentation of total amount of bonds held must be received by Arctic Securities Fixed income at johan.edin@recgroup.com by September 2, 2013.

For further information

Please visit: www.recgroup.com/offering2013.

Or contact:

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

This press release does not constitute or form part of an offer or solicitation to sell, purchase or subscribe for securities in the United States. The securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended. The Company does not intend to register any portion of the offering of any securities in the United States or to conduct a public offering of any securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into the Australia, Canada, Japan or the United States.

Certain statements contained herein that are not statements of historical fact, may constitute forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results or events concerning the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Although the Company has attempted to identify important factors that could cause actual events or results to differ from those described in forward-looking statements contained herein, there can be no assurance that the forward-looking statements will prove to be accurate as actual future events could differ materially from those anticipated in such statements. Except as may be required by applicable law or stock exchange regulation, the Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

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 Securities Trading Act.