REC proposes further measures to reduce debt

Vertically integrated solar company REC is attempting to move forward with plans to split its operations in order to reduce its debts and prolong bond maturities. It has proposed three bond repurchasing options, amended from its previous offer – which is indicated in brackets.

The options are:

REC01: Redemption of up to 100% (up from 60%) of the principal value at 103% of par;

REC02: Redemption of up to 67% (up from 40%) of the principal value at par;

REC03: Redemption of up to 67% (up from 40%) of the principal value at par.

The bondholders meeting, from the REC01, REC02 and REC03 bonds, will meet on August 27 to consider the offer and to decide on the proposed split of the company’s operations.

REC says that the measures, with the issuance of a new $110 million 2018 convertible bond, will prolong debt maturities. The company, in a release issued today, claimed that since its debt peak in 2010, it has reduced its debts from NOK9.4 billion ($1.5 billion) to NOK2.2 billion ($363 million) at the end of Q2 2013.

The transactions and splitting of the company will further reduce this NOK1.2 billion ($280 million), with annual interest payments of NOK100 million ($16.49 million).

Last month it was reported that a note from Citigroup said that the initial restructuring proposal was unlikely to be approved by bondholders, in light of anti dumping duties imposed on polysilicon by the Chinese government.

In today’s statement, REC said that it is hopeful of a positive outcome from discussions between the U.S. and China regarding the duties. REC continued that it is continuing to ship polysilicon at expected levels and its operations are running at full capacity.