Lodbrok finds partner for fight with Hanwha over REC Silicon board

Lodbrok Capital LLP is continuing its push for the election of an additional board member at REC Silicon ASA (OSE:RECSI) but now the investment firm is joined by fellow REC shareholder Water Street Capital Inc.

In the latest of a series of letters addressed to REC Silicon’s directors, Lodbrok and Water Street urge them to summon a new extraordinary general meeting (EGM) in order to nominate a candidate for the additional seat. They are both of the opinion that the polysilicon and silicon gas producer is significantly undervalued in view of the strategic importance of its assets.

Last week, REC Silicon held an EGM at which the four-seat board of directors was formally refashioned with three new names despite opposition from Lodbrok. The latter has been waving the red flag for two weeks now, warning that the move would give South Korea’s Hanwha Group effective control of the board with two representatives. Hanwha is REC Silicon’s largest individual shareholder and is currently discussing a contract for the vast majority of REC Silicon’s production.

“In recent weeks, Lodbrok has been contacted by a wide array of investors in REC, ranging from large international institutions to a grassroot movement of passionate retail shareholders with a deep understanding of the value potential in REC, as well as the risks and challenges to unlocking this potential. Uniformly these investors have echoed Lodbrok’s view that there is scope to improve the governance dynamics in REC, which in the opinion of Lodbrok and Water Street is most easily addressed by the election of an experienced incremental director at the Board,” the latest letter reads. The two investors intend to give details on their proposed candidate well in advance of the requested EGM.

According to the letter, funds managed by Lodbrok and Water Street currently own more than 6% of the shares in REC Silicon. Lodbrok previously said it became the company’s second-largest shareholder after buying more stock to build an ownership stake of just over 3%. Water Street, on the other hand, has been a REC Silicon shareholder for more than a decade.

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