REC stands firm over restructuring proposal

Norwegian solar company Renewable Energy Corporation (REC) has reiterated its commitment to splitting into two entities despite speculation bondholders will seek to block the move.

The Sandvika-based, at least for now, vertically integrated solar company announced an intention last Thursday to spin off its downstream solar business from its silicon division.

The company feels separate entities will be better able to attract business.

But a Bloomberg report on Tuesday referred to a note from Citigroup that said the restructuring plan is unlikely to be approved by bondholders next month because of the introduction by the Chinese government on Wednesday of hefty anti dumping duties on polysilicon made in the U.S. and South Korea.

Poly from REC – manufactured in the U.S. since the company halted production in its native Norway – is attracting the highest tariff of 57 per cent and, according to Bloomberg, Citigroup analysts Jason Channell and Phuc Nguyen said the latest development means bondholders would be unwilling to hive off the downstream solar business and leave the parent company with a poly unit afflicted by crippling duties.

In a further blow for the Norwegian company, Citigroup downgraded its rating of REC from neutral to sell.

REC will seek approval for the restructuring from shareholders at an extraordinary general meeting next month before approaching note holders, again in August, for final approval.

Luc Grare, senior vice president of sales and marketing, solar for REC told pv magazine the company is standing by its proposal to split the business in two as, it says, the best route to success and strong market growth is as separate companies.

On the question of polysilicon duties, Grare would only repeat the company stance that it opposes trade tariffs because they lower competitiveness and raise prices and that REC hopes for a resolution between the EU, China and the U.S.

The imposition of anti dumping duties on U.S. and South Korean polysilicon came as the result of last week’s preliminary decision by the Chinese Ministry of Commerce (Mofcom).

Mofcom has stated a final decision is expected late in the year. The results of a separate enquiry into polysilicon imports from the EU and of a countervailing investigation into U.S. and South Korean polysilicon are still pending.