REC ASA has decided to cease further funding of its solar wafer subsidiary, REC Wafer Norway AS. Consequently there is no basis for a solvent winding-up of the company and the Board of REC Wafer Norway AS has resolved to file for bankruptcy.
During 2011 and 2012 the production of REC Wafer Norway in Glomfjord and at Heroya was permanently closed down. Activities were initiated to wind-up the company.
As of end of July 2012, REC Wafer Norway's estimated carrying value of liabilities exceeded the estimated value of assets by about NOK1.2 billion (US$202 million). Thus a solvent winding-up of the company would be dependent on continued funding from REC, owner of 100% of the shares in REC Wafer Norway.
REC Wafer Norway has previously been released as a guarantor under the existing bonds and convertible bond agreements of REC. REC Wafer Norway is not a guarantor under the new bank loan agreement of REC which came into effect on August 10, 2012.
In connection with the bankruptcy in REC Wafer Norway, REC will incur additional costs and further losses related to certain guarantees, loans, and indemnity agreements currently estimated at approximately NOK0.4 billion. The amount is subject to changes and it is partly dependent on the dividend in the bankruptcy of REC Wafer Norway which again is dependent on the ultimate, realizable values of assets and liabilities in the company as well as other aspects of the bankruptcy proceedings. Except for the said amounts, REC currently has not identified further funding obligations related to the bankruptcy in REC Wafer Norway.
The vast majority of the former employees of REC Wafer Norway have reached the end of their notice period and thus received their final salary settlements. The salaries of the remaining employees are secured through a salary guarantee from REC which is included in the estimated funding obligation presented above.
The bankruptcy of REC Wafer Norway will have no effect on REC Solar and REC Silicon.
Article translated by Jackie Chang
