Renewable Energy Company ASA, which is planning to spin off its solar and silicon divisions as independent companies in an effort to improve its finances, is planning to issue a new convertible bond loan to partially repurchase and exchange existing bond loans.
The move follows apparent opposition by bondholders to the companys plans to separate its REC Silicon and REC Solar businesses. RECs plans, announced last month, would transfer corporate operations for the independent companies to new head offices in Singapore for the solar business, which would become a completely separate entity, and the U.S. for the silicon division, which would remain affiliated with the parent company.
Company bondholders, however, have increasingly opposed the plan since the Chinese government decided to impose hefty anti-dumping duties on polysilicon made in the United States and South Korea. RECs polysilicon has been slapped with the highest Chinese tariff of 57%.
Market analysts have pointed out that bondholders would be unwilling to split off the downstream solar business while leaving the parent company with a polysilicon unit afflicted by crippling duties.
The company said on Monday that the proposal would improve its debt maturity profile by issuing a new convertible bond loan maturing in 2018 and offering a partial repurchase and exchange of the existing 2014 convertible bond as well as offering a partial repurchase of the 2014, 2016 and 2018 bond loans.
REC has mandated Arctic Securities to explore the potential issuance of up to US$110 million (NOK 643 million) in principal amount of convertible bonds that would mature in September 2018.
In conjunction with the issue of the new convertible bond loan, REC will offer to repurchase and exchange bonds in its existing 2009/2014 convertible bond loan for up to 112 million (NOK 876 million), including accrued interest since the July 4, 2013, interest payment date.
Separately, REC would offer to buy back a part of its REC01 bond loans maturing in 2014, REC02 maturing in 2016 and REC03 maturing in 2018, on condition that shareholders agree to the companys plan to buy shares in the REC Solar panel division, which would be spun off as an independent company based in Singapore.
REC would make NOK 800 million ($136.3 million) from the sale of the solar business, leaving the division with no debt and ample cash, and make it possible to recapitalize the silicon unit.