REC restructuring moves step closer after new bond issue is oversubscribed

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Renewable Energy Corporation (REC) has announced its new US$110 million convertible bond offer was oversubscribed and is now closed.

The offer, announced yesterday, was perceived as an attempt by REC to gain some good faith with bondholders and other stakeholders ahead of key votes on the company’s planned restructuring.

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The company announced in July that it would split its PV module and polysilicon production into two separate entities.

REC has been given a 57% anti-dumping tariff by Chinese authorities, the largest of all polysilicon producers, while having the lowest costs due to its FBR technology. The polysilicon side of REC’s business is in better health than its module business.

According to a research note by Citigroup, the company’s bondholders were likely to resist attempts to expose a new standalone REC Silicon arm to these tariffs.

The new convertible bond loan maturing in 2018 and will offer the partial repurchase and exchange of the existing 2014 convertible bond and the partial repurchase of the 2014, 2016 and 2018 bond loans.

The company hopes the restructuring will lower its interest costs.

The separation of the company is subject to the approval of an extraordinary general meeting of the company and also of its bondholders.

The EGM is expected to take place on or around 6 September, according to REC.

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