REC to Spin Off Solar in Deal Valued at 800 Million Kroner

Renewable Energy Corp ASA, a Norwegian solar-power manufacturer, said it will spin off its solar unit in a deal that values the business at 800 million kroner ($133.3 million). The shares climbed.

REC will offer 100 percent of the stock in REC Solar to its existing shareholders, the Sandvika, Oslo-based company said today in a statement. The offering is fully underwritten by REC’s largest shareholders and the new unit, to be called REC Solar, will apply to trade on the Oslo Stock Exchange.

The transaction was announced as the company reported second-quarter sales rose 21 percent from the previous period to 1.5 billion kroner because of higher demand and prices. The spin off needs approval from REC shareholders and bondholders.

“By launching a pure play solar company and a pure play silicon company, both companies will be in a favorable position for attracting capital,” Chief Executive Officer Ole Enger said in the statement.

REC jumped as much as 27 percent to 4 kroner, the highest intraday level since Feb. 23, 2012. The stock traded 18 percent higher as of 10:20 a.m. in the Norwegian capital.

The separation of REC’s solar and silicon units is “an attractive move,” Pareto Securities AS said in an e-mailed note. “This will make silicon a more attractive takeover candidate, as a buyer would not need to later divest solar.”

Asian Expansion

While there is “always interest,” REC isn’t currently in talks about selling its silicon unit, CEO Enger said in an interview in Oslo. “It’s much easier to take an active part in consolidation when you are well financed.”

Former Chairman Jens Ulltveit Moe, who controls about 44 percent of REC, and board member Oeystein Stray Spetalen, who owns about 15 percent, have committed to guarantee the offering, REC said. Arctic Securities ASA, based in Oslo, is managing the offering.

The company, which has closed all its manufacturing operations in Norway as demand slumped, is considering building a polysilicon plant in Asia, with Malaysia, South Korea and China all possible locations, the CEO said. A plant in that region would allow REC to sell into the spot market there more easily, he said.

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