REC Silicon ASA (REC) will build a
polysilicon and silane gas plant in China through a joint
venture as the maker of materials used in solar panels seeks to
take advantage of growing demand in the world’s biggest market.
REC Silicon, based in Moses Lake, Washington, will pay $244
million for 49 percent of a joint venture with Shaanxi Non-Ferrous Tian Hong New Energy Co., it said in a statement today.
Together, the pair will build an 18,000 metric-ton granular
polysilicon plant at Yulin, in Shaanxi province.
“This joint venture is a key step in the worldwide growth
of REC Silicon and will strengthen its leadership position,”
Chief Executive Officer Tore Torvund said in the statement. The
plant will also produce 1,000 tons of Siemens-grade polysilicon
and 500 tons of silane gas loading, the company said.
REC Silicon, which last year spun off its wafer, cell and
panel units to focus on polysilicon output, is seeking to take
advantage of thriving demand for renewable energy in China, the
world’s largest energy consumer. State support for photovoltaic
projects has seen installation costs tumble as China’s
government speeds renewables development to curb pollution.
The Oslo-listed company will also avoid Chinese import fees
as high as 57 percent levied in response to a U.S. decision in
2012 to impose tariffs on Chinese solar cells. Companies based
in China buy more than half the polysilicon they need from
REC Silicon, one of the industry’s lowest cost producers,
will get upfront payments of $198 million in return for allowing
the venture to use its technology. Shaanxi Non-Ferrous will pay
$254 million for a 51 percent stake, the companies said in the
REC Silicon doesn’t expect to raise additional debt or sell
shares to fund its stake in the joint venture, it said.
Shares in REC Silicon gained as much as 16 percent to 4.196
kroner, the highest intraday level in two years, and where it
traded at 4.17 kroner as of 12:30 p.m. in the Norwegian capital.
About 83 million shares have been traded so far today, more than
double the average daily volume during the past three months.
“As a consequence of the announced transaction and
expected receipt of upfront payments, we are of the opinion that
REC Silicon’s refinancing issues in 2014 are resolved,” Lars Kirkeby, a credit analyst at Nordea Bank AB, said in an e-mailed
note. Nordea upgraded its rating on REC Silicon’s bonds to
market perform from underperform.
Yields on REC Silicon’s 9.75 percent senior unsecured note
maturing in 2018 declined to 9.4 percent today from 10.1 percent
yesterday, according to DNB ASA pricing compiled by Bloomberg.
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Stephen Treloar in Oslo at
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Jonas Bergman at