ExclusiveREC Silicon's Norwegian shareholders protest Hanwha's tender offer

REC Silicon's plant in Moses Lake, Wash. / Courtesy of REC Silicon

Hanwha Group, the largest shareholder of REC Silicon with a 33.3 percent stake, is facing backlash from the Norwegian silicon materials maker's minority shareholders. The criticism follows Hanwha's announcement on Friday of a 925 million Norwegian krone ($89 million) tender offer to acquire the remaining 66.6 percent. The offer, priced at 2.2 krone per share, also includes plans to delist the Oslo Stock Exchange-listed company.

A representative of an action group of the minority shareholders told The Korea Times that the offer is a "disgrace and far from satisfactory."

Denouncing the proposal as "a scandalously low offer," the action group is considering legal action against the announcement, which came after nearly four months of the two companies' silence on the minority shareholders' requests to explain how REC Silicon's board decided to shut down its Moses Lake polysilicon plant in the United States and elect new board members representing their interests.

"Even after subtracting $400 million in debt, it is obvious that the underlying values — spread across 420 million shares — are far higher than the lowball offer," the action group said in a statement.

The minority shareholders claim that Hanwha intentionally lowered REC Silicon's stock price. They argue that Hanwha did this by announcing, at the end of last year, that the Moses Lake plant had stopped operations and canceled its 10-year contract with the Korean firm to supply polysilicon for solar panels. As a result, REC Silicon's stock price dropped by 50 percent — from 3.59 krone to 1.79 krone — on the first trading day of the year.

Jens Ulltveit Moe, former majority shareholder of REC Silicon and former leader of its board, told a Norwegian newspaper that Hanwha has planned for a long time to buy the remaining shares when the stock price is at its lowest and when other shareholders give up.

He also said that he chose to sell his REC Silicon shares because "something smelled wrong."

Hanwha Group's headquarters in Seoul / Courtesy of Hanwha Group

If Hanwha holds more than a 90 percent stake in REC Silicon as a result of the tender offer, the Korean firm will have the right for a compulsory acquisition of the remaining 10 percent of the shares.

Given that REC Silicon's stock price jumped 22.79 percent to 2.112 krone on the day of the tender offer announcement, however, the minority shareholders expect Hanwha to face a setback in acquiring 90 percent of the shares through the "lowball offer."

"I don't understand why people are selling for less than 2.2 krone, who knows?" one of the minority shareholders wrote on an online forum.

Another minority shareholder also wrote on the online forum that the Moses Lake plant's value has increased a lot due to many of the new facilities.

"Hanwha has wanted the whole of REC all along, but they are crooks and therefore they would rather go this route and torture all the shareholders and almost get it through a forced sale," he said. "My advice is to stand together and not be fooled by this trap."

Another minority shareholder, who claimed REC Silicon has never responded to over 100 emails he has sent, told The Korea Times that most minority shareholders have lost all their savings.

"There are many sad stories from shareholders who feel led astray because of everything that has happened," he said. "The company has refused to inform properly — hereunder has refused to meet the shareholders in Norway at the last four quarterly presentations."

Yang Ki-won, CEO of Hanwha Corp., the group's de facto holding firm, explained that the tender offer has been launched to take responsibility for the Norwegian firm's financial distress and strategic challenges.

"Following delisting, Hanwha plans to provide adequate financial support and streamline governance to help stabilize operations," he said in a press release.

REC Silicon CEO Kurt Levens stated that the company believes the opportunities presented by this offer, particularly in terms of an enhanced partnership with Hanwha, are firmly in its interest and in the interest of all stakeholders, including shareholders.

Hanwha also denied the claims made by the minority shareholders, saying that REC Silicon has actively communicated with them during quartely earnings announcements and upon their requests.

"The offer price represents a premium, considering the decline in REC Silicon's asset value after the suspension of polysilicon production, the lower stock price target set by European analysts prior to the tender offer announcement and the board's recommendation of the tender offer," the Korean company said.

"The tender offer is expected to succeed, considering the recommendations from European independent research institutions and REC Silicon's board of directors to accept it."

Since 2022, Hanwha Group has remained the largest shareholder of REC Silicon. Hanwha Solutions owns a 21.33 percent stake while Hanwha Corp. holds a 12 percent stake.