‘Positive’ outlook prompts REC Solar to cancel credit facility

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REC Solar has cancelled its NOK200 million (US$32 million) revolving credit facility with sister company REC Silicon, citing a “positive outlook on business”.

Notification of the cancelled credit facility was announced 29 November, saving a predicted NOK7 million (US$1.1 million) a year in interest and repayments for the flexible credit.

Talking to PV Tech, Martin Cooper, senior vice president of finance at REC Solar ASA, said the decision to cancel the credit facility was based on the last two quarters’ results and a “good outlook on the solar industry, and business in Singapore”.

“Even though it sounds a bit odd, it is really positive,” Cooper said of the cancellation decision.

He said REC Solar has “a pile of cash” from government grants and previous sales, and is not using the credit facility.

REC Solar has received one support grant for encouraging business in Singapore, from Singapore's government of SG$200 million (US$159 million), and is expecting another “sweetener” research and development (R&D) grant of SG$35 million (US$27 million) to be paid out over three years. Tuas in Singapore is home to REC Solar’s module manufacturing facilities.

REC Solar is still receiving payments from selling business arms in the UK, Romania and Italy, as well as selling the 60MW North Star solar project in California to First Solar.

Cooper said in a “worst case scenario” REC Solar might need the credit facility, “but it’s not likely, so it’s not worth paying the interest”.

The Tuas facility in Singapore opened in 2010, with REC splitting its silicon and module sales arms into REC Silicon and REC Solar in July. REC Solar was established as a separate entity to REC Silicon with a public share offering on 3 October this year, via the Oslo stock exchange.

Starting with a NOK300 million cash injection and the additional undrawn credit facility of NOK200 million, REC Solar started as almost debt free.

Talking to PV Tech Mikkel Tørud, senior vice president of investor relations and business development at REC Silicon ASA, said the decision was positive for REC Silicon also.

Tørud said REC Silicon provided the revolving credit facility as part of the spin-off process, but it is an undrawn facility “not being used by REC Solar”, and now REC Silicon “has no liability or commitment to REC Solar to provide credit, so from Silicon’s perspective it is positive”. 

Tørud confirmed REC Solar has “healthy cash” and is comfortable with its current liquidity, and the credit facility was just a “back-up.”

Other than supplying REC Solar with silicon, REC Silicon is completely independent of REC Solar, REC is keeping its name and brand, but REC Solar has new shareholders and management, whereas REC Silicon has stayed much the same.

REC Solar’s senior vice president for sales and marketing, Luc Graré told PV Tech in October that with its  favourable, debt-free financial position, the company would be able to focus on research and development again.

This story was updated on Tuesday 3 December to clarify details of the grants REC Solar is receiving from the Singapore government.

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