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REC separates solar and silicon businesses

REC plans to split itself into two entities, launching the silicon and solar divisions as independent, listed companies.

According to Ole Enger, CEO & president of REC, dividing the company along the segment lines will place the two divisions in better positions to capture future growth. It will also ensure a strong financial base which will provide a competitive advantage and a solid fundament for both companies going forward. 

“Solar has become a highly competitive source of energy and we strongly believe the solar industry will experience significant growth over the coming years,” said Enger. “We recognize that it will be increasingly demanding to grow and maintain a leading position with a vertically integrated business model. By launching a pure play solar company and a pure play silicon company, both companies will be in a favourable position for attracting capital, and well equipped to streamline the market approach and stay in the forefront in terms of technology development.”

Launching the separate entities will be done through a financial transaction in which REC offers 100% of the shares in REC Solar to the existing REC shareholders. In the transaction, REC Solar is valued at NOK 800 million (€102 million) and the offering is fully underwritten by the largest shareholders of REC.  REC Solar will be provided with a net cash position of NOK 300 million (€38 million) and apply for a listing at the Oslo Stock Exchange. With an equity ratio of 67, REC Solar will be uniquely positioned as one of the few debt free solar panel suppliers in the industry.

Meanwhile, REC ASA will receive proceeds of NOK 500 million (€63 million) from the transaction. After the transaction, REC ASA will hold net debt of about NOK 1.7 billion (€216 million) and will have an equity ratio of about 53%. The transaction is pending approval by the REC shareholders through an Extraordinary General Meeting and by the REC bondholders.

REC has also released its second quarter results, in which revenues from the quarter were at NOK 1,544 million (€203 million), up 21% from the previous quarter. EBITDA was NOK 152 million (€20 million) in the second quarter, up from NOK 46 million (€6 million) in the previous quarter. EBITDA for REC Solar was NOK 75 million (€10 million) and for REC Silicon NOK 106 million (€14 million).

Further price increase on polysilicon is expected over the next quarter, and strong solar panel demand growth from Asia means the outlook for the industry is positive.

According to REC, the move to separate the silicon and the solar businesses will not impact its interaction with its partners and wide range of stakeholders, as the two business segments both have complete separate organisational set-ups, including operations, R&D, sales & marketing. The REC brand and trademark will in the continuation be owned by the new REC Solar company, headquartered in Singapore under CEO, Øyvind Hasaas, while the parent company and the associated silicon business will be rebranded in due time.

“With these new entities, we are able to launch two independent and strong companies in an industry which is rapidly maturing,” said Enger. “The current senior management of the solar and silicon segments will head up the new companies after a transition period. There are no other plans to change locations or alter the number of staff in the two new organizations, as maintaining the high competence level and strong global market position is of utmost importance to us.”

The current corporate headquarters in Sandvika, Norway, will be downsized significantly, with corporate functions and roles transferred to the new head offices in Singapore for the solar business and to the US for the silicon business.

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Energy efficiency  •  Photovoltaics (PV)  •  Policy, investment and markets  •  Solar electricity  •  Solar heating and cooling