REC shareholders to vote on new convertible bond

Norwegian solar manufacturer Renewable Energy Corporation (REC) faces the first of two potentially thorny shareholder meetings on Wednesday as it seeks permission to issue a new convertible bond and to separate its module and silicon businesses.

On Wednesday an extraordinary general meeting (EGM) at the company’s Sandvika headquarters will consider a proposal to issue a new convertible bond loan of up to US$110 million to partially repurchase and exchange for the existing 2014 convertible bond and partially repurchase 2014, 2016 and 2018 bond loans.

The proposed new convertible bond would mature in September 2018.

Wednesday’s vote comes amid a backdrop of reported shareholder discontent over plans to spin off REC’s module manufacturing Solar division into a separate, Singapore-based business.

The parent company says selling off the solar division for NOK800 million (US$65.85 million) would help both the new entity and the remaining, U.S.-based parent company, which would be renamed REC Silicon under the plans.

But shareholders are reportedly unhappy at the prospect of being saddled with a silicon company based in the U.S. which faces 57% import tariffs imposed by the Chinese government on polysilicon manufactured in the U.S. and South Korea.

Shareholders rebelled in June

The rebellious nature of REC’s shareholders was spelt out at an EGM in June when a board request for permission to issue 10% of the company’s share capital for equity raising was voted down days after REC chief financial officer Kjell Christian Bjornsen told pv magazine the proposal was merely a matter of ‘housekeeping.’

The vote on the company’s controversial restructuring plans will take place on September 23, also at Sandvika, and in a notice of the EGM issued today by REC, the company said that although the downstream industry is moving into a period of profit it is "immature, fragmented, weakly capitalized and ripe for consolidation."

The notice pointedly indicates shareholder approval for the restructuring is not legally required but says REC feels it ‘prudent’ to consult shareholders.

The related proposal to change the name of the surviving silicon business, however, is described as dependant on ‘approval by the shareholders meeting’ for the separation plan.