REC - PROPOSED REFINANCING, SUCCESSFUL PLACING ...

NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, HONG KONG OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.

RENEWABLE ENERGY CORPORATION ASA - PROPOSED REFINANCING, SUCCESSFUL PLACING OF PRIVATE PLACEMENT, CONTEMPLATED SUBSEQUENT OFFERING AND TRADING UPDATE

Sandvika 22 June 2012

The board of directors (the "Board of Directors") of Renewable Energy Corporation ASA ("REC" or the "Company") has over a period had an objective to extend the maturity of the Company's debt facilities and to strengthen the balance sheet of the Company. As a result of this effort the Board of Directors has resolved to propose an equity offering in the gross amount of NOK 1,300 million by way of an undocumented private placement of new shares directed towards certain existing shareholders and new investors (the "Private Placement").

The Private Placement

The Board of Directors has today resolved to propose to the Company's Extraordinary General Meeting to be held on or about 18 July 2012 (the "EGM") to issue a total of 866,666,667 new shares at a subscription price of NOK 1.50 per share, raising gross proceeds of NOK 1,300 million in the Private Placement. The subscription price was determined by the Board of Directors based on a bookbuilding process conducted by Arctic Securities ASA (Coordinator), DNB Markets, a part of DNB Bank ASA and Nordea Markets, a part of Nordea Bank Norge ASA, who have been engaged as joint lead managers and bookrunners for the Private Placement (collectively, the "Managers").

The proceeds from the Private Placement will be used for a partial cash redemption of EUR 100 million (including voting fee) of the Company's outstanding convertible bonds, investments related to sustaining a leading industry position, strengthening of the balance sheet and general corporate purposes.

The subscribers will be notified of their conditional allocation today.

The following primary insiders were allocated new shares in the Private Placement, either through privately held investment vehicles or personally:

1. Umoe AS (controlled and represented on the Board of Directors by the Chairman of the Board of Directors Jens Ulltveit-Moe) was allocated 266,666,666 new shares. Umoe AS currently holds 59,497,211 shares and will hold 326,163,877 shares after completion of the Private Placement. 

2. Canica AS (represented on the Board of Directors by board member Peter Ruzicka), was allocated 106,666,666 new shares. Canica AS currently holds 0 shares and will hold 106,666,666 shares after completion of the Private Placement. 

The members of the Board of Directors and REC Group Management (primary insiders) were not given the opportunity to participate in the private placement.

The completion of the Private Placement is conditional upon the following conditions being satisfied by 31 July 2012:

1. the corporate resolutions of the Company's Board of Directors and the EGM required to implement the Private Placement, the Subsequent Offering (as defined below) and the Convertible Bond Refinancing (as defined below) being validly made; 

2. registration of the share capital increase in the Company pertaining to the Private Placement with the Norwegian Register of Business Enterprises; 

3. the holders of the Convertible Bond (as defined below) voting in favour of certain amendments to the Convertible Bond to be announced in a separate press release today and to be considered at a bondholders' meeting to be held on or about 3 July 2012; and 

4. the Bank Debt Refinancing (as defined below) being completed, subject only to completion of the Private Placement, the Convertible Bond Refinancing, consent from senior bondholders to the amendment request of 22 May 2012 and customary conditions precedent for such financing. 

The settlement of the Private Placement is expected to take place on or around 19 July 2012. In the event that the prospectus for listing of the new shares in the Private Placement is not approved by the Financial Supervisory Authority of Norway and published upon issuance of the new shares, the new shares will be assigned a separate securities number (ISIN) and will not be listed or tradable on Oslo Børs pending approval and publication of such prospectus. The prospectus is expected to be published as soon as it is approved by the Financial Supervisory Authority of Norway.

Following the registration of the share capital increase pertaining to the Private Placement with the Norwegian Register of Business Enterprises, the Company will have an issued share capital of NOK 1,863,818,785 divided into 1,863,818,785 shares, each with a nominal value of NOK 1.00.

The Refinancing

In conjunction with the Private Placement, the Board of Directors has undertaken to:

1. refinance the Company's bank debt facilities into a new NOK 2,000 million bank debt facility with maturity in May 2015 (the "Bank Debt Refinancing");  

2. to present for the holders of the 6.50 per cent subordinated unsecured convertible bond issue 2009/2014 (the "Convertible Bond") a refinancing proposal (the "Convertible Bond Refinancing"). The Company has been in discussions with certain large holders of the bonds and has obtained pre-acceptance of the Convertible Bond Refinancing from holders representing approximately 23% of bonds. Summons to a bondholders' meeting will be published today; and 

3. subject to completion of the Private Placement, the Company will propose to the EGM that the EGM authorises the Board of Directors to conduct a subsequent offering with gross proceeds of up to NOK 300 million to the existing shareholders of the Company as of 21 June 2012 who were not invited to participate in the Private Placement (the "Subsequent Offering", and, together with the Bank Debt Refinancing, the Convertible Bond Refinancing and the Private Placement, the "Refinancing"). 

The Company will host an analyst conference call to update on the Refinancing today at 14:00 hours (CET). Participants at this call can dial in on [phone] / 84 00 40 #.

Arctic Securities ASA has been engaged as financial advisor to the Company in relation to the Refinancing and Arctic Securities ASA and Citigroup Global Markets Limited have been engaged as the Borrower's Solicitation Agents in relation to the Convertible Bond Refinancing.

In conjunction with the contemplated refinancing, the Company provides a trading update as set out below.

Impairments of cash generating units

Preliminary impairment tests indicate impairment charge of fixed assets in the second quarter 2012 of approximately NOK 3.5 billion, primarily related to the Singapore wafer, cell & module facility. The impairment charge to be recognized in the second quarter is primarily driven by expectation of further reduction to module prices, and is subject to changes in key assumptions up to the reporting of the second quarter.

Closing of Wafer operations in Norway

REC expects to recognize additional expenses affecting EBITDA for close downs of Herøya 3&4 of approximately NOK 750 million in the second quarter 2012, primarily related to restructuring costs, onerous contracts and write down of inventories and prepayments. Total remaining payments of expenses affecting EBITDA for closing all production capacity in Norway is estimated to NOK 966 million, of which NOK 403 million in the second half of 2012 and the remaining NOK 563 million in later periods. These estimates are uncertain and subject to changes. REC Wafer Norway AS held finance lease liabilities of NOK 820 million at the end of the first quarter 2012.

REC continues the work to reduce the costs of closing the wafer production capacity in Norway. As long as REC Wafer Norway AS is a guarantor under REC's credit facility and senior bond agreements, REC Wafer Norway AS must be wound up on a solvent basis.

REC has asked bond holders to permit REC Wafer Norway AS to resign as guarantor under REC's senior bond agreements provided REC Wafer is no longer a guarantor under the existing credit facility. A bondholders' meeting was held on June 7, 2012, where necessary meeting quorum was not reached. A new bondholders' meeting will be held today, where there are no requirements as to attendance to form a quorum.

If the required resignation of REC Wafer Norway AS as a guarantor under REC's senior bond agreements is obtained, there are no further obligations that require REC to continue funding of REC Wafer Norway AS provided the existing credit facility is replaced by one where REC Wafer is not a guarantor. REC will on such basis consider ceasing further funding of REC Wafer Norway AS.

Termination of a long-term wafer sales contract

On June 5, 2012, REC announced the termination of a long-term wafer sales contract and has received a USD 35 million cash compensation in this respect. Income from this cancellation will be recognized in the second quarter 2012.

Reference is made to the attached presentation dated 21 June 2012 (the "Company Presentation") for further details on the contemplated Refinancing and the trading update.

For further information, please visit www.recgroup.com/refinancing2012 or contact:

Bjørn Brenna, EVP & CFO, phone: [phone]
Mikkel Tørud, VP & IRO, phone: [phone]

About REC

REC is a leading vertically integrated solar energy company. REC produces polysilicon, wafers, cells and modules for the solar industry, and silicon materials for the electronic industry. REC also engages in project development in selected PV segments. Founded in Norway in 1996, REC employs around 3,200 people globally with revenues of more than EUR 1.7 billion in 2011, approximately USD 2.4 billion. Please visit www.recgroup.com to learn more about REC.

* * *

Important notice:

This announcement is not an offer for sale of securities in the United States or any other country in which such offer would be unlawful or would require prospectus, registration or other measures. The securities referred to herein have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be sold in the United States absent registration or pursuant to an exemption from registration under the U.S. Securities Act. REC does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into the United States, Canada, Australia, Hong Kong, Japan or any other jurisdiction in which such distribution would be unlawful or would require registration or other measures.

In any EEA Member State that has implemented Directive 2003/71/EC (together with any applicable implementing measures in any member State, the "Prospectus Directive"), this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive.

This announcement is only directed at (a) persons who are outside the United Kingdom; or (b) investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (c) persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc.") of the Order; or (d) persons to whom any invitation or inducement to engage in investment activity can be communicated in circumstances where Section 21(1) of the Financial Services and Markets Act 2000 does not apply.

Certain statements included within this announcement and its appendix contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for REC, such as planned expansions, investments or other projects, (c) costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in REC's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized.

No assurance can be given that such expectations will prove to have been correct. REC disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Announcement presentation

---

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Renewable Energy Corporation ASA via Thomson Reuters ONE

HUG#1621418