Solar specialist shores up finances as recession bites

Norwegian solar products maker Renewable Energy Corporation (REC) has announced plans to shore up its finances following a recession-related drop in demand.

REC announced in a statement yesterday that it is to "strengthen its financial position" by about £800m (8bn Norwegian kroner) by restructuring its existing debt and issuing new shares.

"Through new equity and significantly improved credit lines, we have taken the necessary steps to secure long-term financing of our ongoing capital expenditure programme and provided a foundation for developing potential opportunities in a growing industry," said Ole Enger, REC president and chief executive officer, adding that shareholders had been "highly supportive" of the move.

The company said that it has already restructured existing debt and is adding new lines of credit, including a bond issue, which should amount to about £400m (4bn Norwegian kroner) in additional funding. REC said it is working with DnB NOR Markets, Nordea and SEB as joint lead arrangers for the bond issue.

REC is one of the world's largest producers of solar-grade silicon and wafers for solar energy projects, but has faced increasingly tough trading conditions as a result of the economic downturn. According to Reuters reports, shares in the company have dropped by more than 60 per cent in the past 12 months, as concerns have mounted over the short-term outlook for solar suppliers.

REC is not the only solar player to be experiencing difficulties. Analysts have pointed to the lack of credit hitting long-term investment in large-scale solar farm developments, while many of those government regulations mandating lower emissions and funding for sustainable technologies have yet to take hold.

In April, Swiss firm Oerlikon Group announced it was cutting 60 people from its solar unit after seeing first-quarter sales dip by more than 30 per cent year on year, while many of the top US players in the market have also seen share prices slide this year.

REC said it will call for an extraordinary general meeting on 5 June 2009 to resolve its rights issue.