REC financial restructuring hits hurdle

03. July 2012 | Financial & Legal Affairs, Global PV markets, Markets & Trends | By:  Jonathan Gifford

On June 22, the Renewable Energy Corporation (REC) announced a number of financial restructuring measures including measures to restructure its revolving debt facility and to offer approximately 870,000 million new shares to raise around NOK1.3 billion (US$218 million).

A REC facility in Norway.

REC's financial restructuring may not go ahead given today's vote.

These measures appear to have hit a major financial hurdle today, with a bondholders' meeting voting against changes to the bond loan agreement. The REC share issue, which would have raised valuable capital in an extremely difficult market, is now in doubt.

This most recent REC share issue was already causing controversy from other quarters. A group of around 150 REC shareholders, representing approximately 15 million shares in voting power, are protesting the latest share offering from the Norwegian company. In what could be considered a good sign for the company, the shareholders are protesting because they want the opportunity to buy more shares than have been currently offered to them.

The shareholder group, which has raised the objections, had taken issue not with the share issue itself, but rather on the way it is being rolled out. The protesting shareholders claimed that shares have been issued preferentially to larger shareholders and therefore it could be in violation of the principle that all shareholders should have an equal opportunity to purchase the new shares.

A shareholder representative, speaking to pv-magazine on condition of anonymity, said that he and many other smaller shareholders want an equal access to the issuing. "In my opinion not all shareholders have been treated equally and the way I see it, the majority shareholders are getting a favorable deal compared with minority shareholders," the representative said.

The REC board had proposed that the shares be offered in two issues, the first is for a select number of shareholders and the second to the smaller shareholders. pv magazine understands that the number of shares offered to the first group far exceeds that being offered to the smaller shareholders.

The issue caused some debate in Norway’s financial press and on online shareholder forums. The debate centered on whether the nature of the share issuing has violated the principle, which exists in Norway’s financial regulations, that all shareholders should have equal opportunities to purchase shares in a company at the time of an issue. "There should not be a deal which is favorable for one part of the stock owners and not for the other," the representative explained.

The disgruntled minor shareholders had planned to protest against issue and had hoped to vote it down at the company’s Extraordinary General Meeting, which was to be held in Sandvika, Norway, on July 20.

pv-magazine attempted repeatedly to contact REC today, however representatives were unavailable for comment.


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