Debt-laden Norwegian solar material supplier Renewable Energy Corp said most of its customers on long-term contracts were looking to agree lower wafer prices while module prices could fall 30 percent this year, sending its shares lower on Monday.
The pessimistic outlook comes ahead of the results of a 4.5 billion crown ($704 million) cash call, due to be published after the market close.
The global crisis has shaken REC as well as the entire the solar industry, which is suffering from overcapacity, tight credit conditions and a lack of project funding.
It is slightly negative because they open up for some adjustments of wafer contracts, said Eivind Bergkaasa, analyst at Arctic Securities, calling REC's statement a summary of its previous profit warnings.
Shares in REC were down 6.0 percent to 55.0 crowns at 0829 GMT (4:29 a.m. EDT), while Oslo's benchmark index was off 2.0 percent. REC said that its wafer unit had received inquiries from a majority of customers with long-term contracts concerning possible downward adjustments to volumes and/or prices.
It may be in REC Wafer's interest to fully exercise its rights under the long-term sales contracts in order to protect its position, REC said in a statement.
On the other hand, it could be in (our) ... interest to... make individual adjustments to the timing of shipments and/or prices, taking into consideration its long standing relationship with key customers.
It said REC Wafer has so far only made minor adjustments.
REC said it was also in talks on an additional loan facility of up to 1 billion crowns, and that its debt and equity refinancing plan would amount to 7.5-8.5 billion crowns in total, including a 3 billion debt package announced on June 19.
The rights issue is expected to be priced at a small discount to the market, said analysts.
MOSES LAKE ON TRACK
REC supplies the solar industry with high-grade silicon and wafers that absorb the sun's energy as well as producing full modules for end-clients.
REC said there was no change in its Silicon III plant ramp-up schedule in Moses Lake, Washington, which has been plagued with start-up problems.
Right now they are (hurt by delays at Silicon III), but REC seems to be getting the plant up and running, which will make them cost leading in the silicon division, Preben Rasch-Olsen, an analyst at Carnegie brokers in Oslo.
REC said its Singapore plant would probably cost less than originally envisaged due to the weaker construction market.
The new plant is expected to be more cost competitive than REC's existing facilities. Ramp-up is expected to start in the first and second quarter of 2010, REC said.
Overall, average analysts' estimate reviews for 2009 published so far in June seem to cater for these issues, REC said after mentioning its silicon, wafer and module activities.
($1=6.393 Norwegian Crown)
(Reporting by Oslo newsroom; editing by John Stonestreet and Simon Jessop)