Renewable Energy Corp. ASA (REC), a Norwegian solar company, will stop funding and file for insolvency for its only manufacturing unit in the country after halting production of silicon wafers there.
REC Wafer Norway AS’s liabilities exceeded its assets by about 1.2 billion kroner ($203 million) at the end of July, making a solvent winding-up of the unit dependent on more money from REC, the Sandvika, Norway-based group said in a statement today. The company that said in April it would close the unit expects about 400 million kroner of costs from the bankruptcy.
REC is suffering with the strength of the krone along with a slump in prices for the raw material used in solar cells. The shutdowns already have resulted in the the firing of 700 employees. Most of the remaining 600 staff at the wafer unit will lose their jobs in the second half of the year.
The bankruptcy of REC Wafer Norway won’t affect REC’s solar and silicon units, it said today. The company will continue manufacture polysilicon in the U.S., where it is able to produce at a lower cost than competitors. It also makes solar modules in Singapore.
“Although we had looked for potential savings of up to about 1 billion kroner, we believe the news is positive as REC has been somewhat vague when discussing this topic in the past,” Pareto Securities ASA said in a note to clients. The move will save REC about 800 million kroner, it said.
The wafer unit has already been removed as guarantor from REC’s bond-loan agreements and wasn’t included in a new bank loan agreement which came into effect earlier this month, REC said.
REC, whose shares have slumped 97 percent since listing six years ago, rose as much as 5.4 percent and traded 3.4 percent higher at 2.01 kroner as of 2:43 p.m. in Oslo.
European solar-component makers are under pressure from Chinese rivals that expanded capacity just as demand slowed, causing wafer and cell prices to plummet. Demand also shrank as France, Italy and Germany reduced subsidies to cap booming installations.
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