Cost Modeling

REC Forms Separate Entities for Solar and Silicon Products

18 July 2013

Renewable Energy Corporation ASA, a Norway-based global provider of solar electricity solutions that goes by the name REC, will divide the company into two entities, launching the Silicon and Solar divisions as independently listed companies.

REC’s silicon division is a large producer of polysilicon for the solar energy industry and silicon materials for the electronics industry. The solar division produces solar panels to the residential, commercial and utilities segments.

"By launching a pure play solar company and a pure play silicon company, both companies will be in a favorable position for attracting capital, and well equipped to streamline the market approach and stay in the forefront in terms of technology development," said Ole Enger, chief executive and president of REC.

REC will offer 100 percent of the shares in REC Solar to the existing REC shareholders. In the transaction, REC is valued at 102 million Euros (about $134 million).

REC Solar will be provided with a net cash position of NOK 300 million (EUR 38 million) and apply for a listing on the Oslo Stock Exchange. With an equity ratio of 67 percent, REC Solar will be positioned as one of the few debt free solar panel suppliers in the industry, according to the company.

The two business segments have completely separate organizational set-ups, including operations, R&D, and sales and marketing. The REC brand and trademark will be owned by the new REC Solar company, headquartered in Singapore under CEO, Øyvind Hasaas. The parent company and the associated silicon business will be rebranded in due time, according to the company.

The current corporate headquarters in Sandvika, Norway, after a transition period will be downsized significantly, with corporate functions and roles transferred to the new head offices in Singapore for the solar business and the U.S. for the silicon business, according to the company.

The transaction is pending approval by the REC shareholders through an extraordinary general meeting and by the REC bondholders.

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