REC shareholders approve $110 million convertible bond

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Norwegian solar company Renewable Energy Corporation (REC) cleared the first of two hurdles to a planned reorganization last week when shareholders passed a resolution to issue a new convertible bond.

At an extraordinary general meeting in the company’s Sandvika headquarters on Wednesday, shareholders approved the issuance of a convertible bond loan of up to US$110 million to partially repurchase and exchange for an existing 2014 convertible bond and partially repurchase 2014, 2016 and 2018 bond loans.

The new convertible bond will mature in September 2018.

On the same day, REC announced the withdrawal of a NOK400 million (US$65.7 million) revolving credit facility and guarantee with the DNB and Nordea banks.

In a statement announcing the news, the board of REC, which wants to spin off the company’s solar business from its core silicon business, said the revolving credit facility, which was undrawn and due to mature in April, has ”limited value” and both new companies will seek to negotiate their own credit arrangements in future.

As a result of the change, REC expects to free up NOK100 million in current deposits as commitments to the banks are withdrawn.

In a final piece of news to keep shareholders onside ahead of a crucial vote over the split proposals on Monday, September 23, REC announced its NOK200 million ”indeminification loan” has been renegotiated to remove all financial covenants and will now mature in February 2016.

REC plans to separate off its solar business into a new, Singapore-based entity to return to its polysilicon manufacturing roots and rename the business REC Silicon.

Analysts have speculating shareholders might not be keen on hiving off a profitable downstream solar business in order to be saddled with a silicon business facing import duties of 57 per cent from the Chinese government on any polysilicon made in the U.S., as REC’s product is.