Sandvika, October 2, 2009, REC today announces that it intends to
issue a EUR 300 million convertible bond (the "Bonds") to
institutional investors, due in June 2014.
REC today announces that it intends to issue a EUR 300 million
convertible bond, with an upsize option of EUR 50 million. The
subordinated unsecured convertible bonds will be convertible into new
ordinary shares of REC. The Bonds are expected to have a coupon of
between 6.0 - 6.5 percent payable quarterly in arrear, commencing in
January, 2010.
The conversion premium is expected to be between 30 - 35 percent over
the volume weighted average price of REC's shares on the Oslo Stock
Exchange from the time of launch until the time of pricing. The Bonds
will be issued and redeemed at 100 percent of the principal amount,
the maturity date is June 4, 2014. REC shall have the right to
convert the Bonds into ordinary shares at any time on or after
January 4, 2013, provided that the value of the underlying shares on
the Oslo Stock Exchange (translated into EUR) on at least twenty
trading days within a period of thirty consecutive trading days has
exceeded 150 percent of the principal amount of the outstanding
Bonds. The Bonds will not be listed initially, but REC may decide to
list the Bonds at a later time.
The proceeds from the Bonds ensure further financial robustness and
flexibility for the REC Group, and will be used for general corporate
purposes. Final terms are expected to be determined and announced on
or about October 2, 2009, and the Bonds are expected to be settled on
or about October 13, 2009.
REC has received confirmation from its bank syndicates to the effect
that the subordinated convertible bond loan will not be counted as
debt under the gearing ratio covenants in REC existing loan
agreements, and thus improves the capital structure.
Deutsche Bank AG has acted as co-ordinator in respect to the offering
of the Bonds and REC has appointed BNP PARIBAS, BofA Merrill Lynch
and Deutsche Bank AG as Joint Bookrunners and Joint Lead Managers.
Commerzbank and Arctic Securities are appointed as Co-Managers.
In context of the convertible bond issue, REC wishes to make the
following trading update (please refer to the second quarter
report/presentation for more detailed guidance on the third quarter
and full year 2009):
Regarding REC Silicon: Silicon III is currently undergoing commercial
ramp-up and there is presently no change to the already communicated
ramp-up schedule. REC has not made any formal adjustments to the
already communicated production target, but reiterates that reaching
the full year 2009 production targets remain challenging. The
experience with the FBR technology to date remains positive and the
potential of the process and the quality of the product have been
confirmed.
Regarding REC Wafer: As previously reported, REC has been engaged in
dialogue with its customers to assist them in coping with the effects
of the market downturn. In most cases, REC and its customers have
been able to find solutions for 2009 that are commercially acceptable
for both parties. It is likely that the present weak market will
continue in 2010, and it is therefore in RECs best interest to make
additional contractual adjustments related to 2010. Such adjustments
will have an adverse effect on EBITDA for the relevant period. During
third quarter, and as previously communicated, REC Wafer has
gradually increased the production capacity utilization.
Regarding REC Solar: Although the market has started to demand
additional volumes of modules for delivery in the second half of
2009, prices still remain under pressure. REC Solar's sales prices
for solar modules for the whole year of 2009 are on average expected
to be down by approximately 35 percent compared to the average of
2008. In the second half of August, and as previously communicated,
REC Solar has returned to full module production and cell production
will be aligned to the internal need for solar cells.
Regarding Sovello: As previously communicated, Sovello was not in
compliance with all its financial covenants at the end of 2008, and
currently operates under a grace post the September-end waiver
expiration date. REC expects that the current process of extending
the waiver to the end of November will be successful, and will
continue to work towards finding a longer-term financing solution
together with the other owners of Sovello and the Sovello bank
syndicate.
Regarding the Singapore Project: The project continues to trend
towards a lower capital expenditure compared to the initial
investment case, reflecting a less heated construction market. REC
still expects the new plant to be more cost competitive than REC's
existing facilities, and ramp-up is expected to start in the first
half of 2010. REC is now preparing the operational organization for
start of production, and the ramp-up is expected to be aligned to
market demand and prudent working capital management.
On financing, REC successfully concluded its rights issue in July
2009. Subsequently, REC has also completed the issue of a 5-year
fixed rate bond loan in the Norwegian bond market. The bond loan pays
a fixed spread of 690 basis points, and has maturity on September 16,
2014. REC has also received a committed term sheet for a NOK 1,490
million term loan from Eksportfinans and is currently negotiating the
loan agreement. The Board is on a continuous basis monitoring the
capital structure and potential additional funding needs for the
Company.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART
DIRECTLY OR INDIRECTLY, IN AUSTRALIA, CANADA, HONG KONG, SOUTH
AFRICA, JAPAN OR THE UNITED STATES:
Certain statements contained herein that are not statements of
historical fact, may constitute forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause the actual results
or events concerning the Company to be materially different from the
historical results or from any future results expressed or implied by
such forward-looking statements. Although REC has attempted to
identify important factors that could cause actual events or results
to differ from those described in forward-looking statements
contained herein, there can be no assurance that the forward-looking
statements will prove to be accurate as actual future events could
differ materially from those anticipated in such statements. Except
as may be required by applicable law or stock exchange regulation,
REC undertakes no obligation to update publicly or release any
revisions to these forward-looking statements to reflect events or
circumstances after the date of this document or to reflect the
occurrence of unanticipated events.
This press release is for information purposes only and does not
constitute or form part of, and should not be construed as an offer
or an invitation to sell or issue, or the solicitation of any offer
to buy or subscribe for, any securities. In connection with this
transaction there has not been, nor will there be, any public
offering of the Bonds. No prospectus will be prepared in connection
with the offering of the Bonds. The Bonds may not be offered to the
public in any jurisdiction in circumstances which would require REC
to prepare or register any prospectus or offering document relating
to the Bonds in such jurisdiction. The distribution of this press
release and the offer and sale of the Bonds in certain jurisdictions
may be restricted by law. Any persons reading this press release
should inform themselves of and observe any such restrictions.
This press release does not constitute an offer to sell or a
solicitation of an offer to purchase any securities in the United
States. The securities referred to herein (including the Bonds and
the shares of REC) have not been and will not be registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act") or the
laws of any state within the U.S., and may not be offered or sold in
the United States, except in a transaction not subject to, or
pursuant to an applicable exemption from, the registration
requirements of the Securities Act or any state securities laws. This
press release and the information contained herein may not be
distributed or sent into the United States, or in any other
jurisdiction in which offers or sales of the securities described
herein would be prohibited by applicable laws and should not be
distributed to United States persons or publications with a general
circulation in the United States. No offering of the Bonds is being
made in the United States.
This press release is only being distributed to and is only directed
at (i) persons who have professional experience in matters relating
to investments falling within Article 19(1) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order")
and (ii) high net worth entities falling within Article 49(2) of the
Order and (iii) persons to whom it would otherwise be lawful to
distribute it (all such persons together being referred to as
"relevant persons"). The Bonds are only available to, and any
invitation, offer or agreement to subscribe, purchase or otherwise
acquire such Bonds will be engaged in only with, relevant persons.
Any person who is not a relevant person should not act or rely on
this press release or any of its contents.
Stabilization/FSA
For more information, please contact:
Jon André Løkke, SVP and Investor Relations Officer, +47 907 44 949
About REC
REC is the leading vertically integrated player in the solar energy
industry. REC Silicon and REC Wafer are among the world's largest
producers of polysilicon and wafers for solar applications. REC Solar
is a rapidly growing manufacturer of solar cells and modules, and are
also engaging in project development activities in selected segments
of the PV market. REC had revenues of NOK 8 191 million and an
operating profit of NOK 2 529 million in 2008. Close to 3 000
employees work in REC's worldwide organization. Please also see
www.recgroup.com.
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