Renewable Energy Corporation (OSE: REC) aims to extend the maturity of its debt financing and strengthen balance sheet hurt by one-off costs and general pressure on the entire industry in a comprehensive solution involving a 1.3 billion equity issue via an undocumented private placement. The Board has decided to propose to an EGM on or about July 18th to issue 866 666 667 new shares at a subscription price of 1.5 NOK for the private placement. This would nearly double the existing amount of shares at 1.83 billion plus. Furthermore the REC share will be traded ex contingent additional rights offering of 300 million NOK to the existing shareholders who were not invited to take part in the private placement from today.
The proceeds are supposed to be used to partially redeem 100 million Euros (about 750 million NOK) of outstanding convertible bonds, new investments and general strengthening of balance sheet. Primary insiders Umoe AS (over 266 million shares)represented by Chairman Jens Ulltveit-Moe and Canica AS (over 106 million shares)represented by Board member Peter Ruzicka were allocated significant amount of new shares in the private placement subject to among other things EGM approval and bank debt refinancing for a new 2 billion NOK bank debt facility maturing in 2015.
The company said that preliminary impairment tests indicate a 3.5 billion NOK charge in Q2 accounts primarily related to Singapore wafer, cell & module facility. This assumes further module price reductions. Additional expenses of 750 million NOK is coming from closing of wafer operations in Norway. The share which has climbed nicely in the past week, looks to be under considerable pressure at market open.
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