REC Silicon has secured a US$40 million term loan from Hanwha International LLC, a subsidiary of Korean conglomerate and REC majority shareholder, Hanwha Solutions, to support its transition away from polysilicon production.
The loan will support REC Silicon’s capital needs during the shutdown of its US polysilicon production plant and transition into a “pure play silicon gas provider”, the company said.
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Two previous US$25 million bridge loans from Hanwha International will also be rolled into the new loan upon their maturity dates, extending them.
REC Silicon announced the abandonment of polysilicon production in Moses Lake, Washington at the start of this year. It said that the shutdown followed an unsuccessful polysilicon quality test and the subsequent termination of its supply agreement with solar manufacturer Qcells North America, which is also owned by Hanwha Solutions.
The agreement with Qcells was formally terminated along with the announcement of the Hanwha International loan last week (24 January). As part of the termination, the “reimbursement of the prepayment of US$30 million by REC Silicon to QCells has been delayed for one year without interest,” REC said.
“Proceeds from the loan will strengthen REC Silicon’s liquidity position and provide it with the capital necessary to cease production at Moses Lake safely and in compliance with applicable regulation,” it added.
The US$40 million loan is secured against REC’s assets, though the announcement did not specify whether this refers to the remaining facilities at Moses Lake or the company’s silane gas facility in Butte, Montana.
REC said it is undergoing a “strategic review to address financial and operational challenges…considering additional cost reduction activities, financing options, and other mitigative actions.”
Minority shareholder concerns
Following the shutdown of the Moses Lake facility, a group of minority shareholders in REC Silicon, mostly based in the company’s native Norway, banded together to seek more information on the decisions made by the majority shareholder, Hanwha Solutions.
This group of shareholders and some polysilicon market experts raised questions about the sequence of events which led to the quality test failure and Qcells’ decision to pull out of the supply deal. Both Johannes Bernreuter, a polysilicon market analyst, and an unnamed US-based technical expert told PV Tech Premium last week of their initial “scepticism” over the claims of quality issues. Other sources have pointed to inconsistencies in REC’s polysilicon product, which may have perturbed Hanwha Qcells.
Reacting to the most recent loan from Hanwha International, the minority shareholder group said on its website: “On the positive side, a company affiliated with the largest shareholder is providing additional financing and the maturity of existing loans has been extended.
“Unlike previous announcements, this time it is explicitly stated that the financing is secured through collateral in the company’s assets. It remains unclear whether this pertains to Moses Lake, Butte, or both. This uncertainty adds to a growing “black box” of secrecy.
“As shareholders, we are still left without clarity about what transpired between the successful laboratory test in September 2024, which gave the green light, and the failed production test in December 2024.”
A few days after the Moses Lake shutdown, Hanwha has signed a polysilicon supply deal with OCI Holdings for product manufactured in Malaysia.
