Friday’s Stock Exchange Announcement – Some immediate thoughts: Financing, the Black Box, and Our Activities

Friday’s stock exchange announcement was released at a time that, for many Norwegian shareholders, fell somewhere between the last glass of red wine and bedtime. While the timing can be considered unfortunate, the content of the announcement gives reason for both optimism and some concern.

On the positive side, a company affiliated with the largest shareholder is providing additional financing, and the maturity of existing loans has been extended.  Unlike previous announcements, this time it is explicitly stated that the financing is secured through collateral in the company’s assets It remains unclear whether this pertains to Moses Lake, Butte, or both. This uncertainty adds to a growing “black box” of secrecy.

Within this same “box” lies the details of the 2023 agreement between REC and the customer, approved by the so-called “independent” board members. As shareholders, we are still left without clarity about what transpired between the successful laboratory test in September 2024, which gave the green light, and the failed production test in December 2024. The fact that the customer had secured a new supplier in Malaysia within the first week of the year appears strikingly swift. Whether the agreement included provisions for a minimum price per kilogram or delivery volumes remains unknown. As yesterday’s announcement revealed, the agreement has now been terminated without any claims for compensation from either REC or the customer.

The stock exchange announcement does not specify who in the board or management has accepted the termination of the agreement or the decision to secure loans with assets. The agreement was originally signed by what were described as three independent board members; we must assume and hope that these latest decisions have been made at arm's length and in the best interests of all shareholders.

About the Shareholder Initiative

We continue to encourage those who believe they have useful skills and experience, cf. previous updates, to step forward (our email address is MakeRECGreatAgain@outlook.com). Alternatively, use your shareholder rights to contact the company, the media, or the authorities.

We, the members of the initiative, represent a broad spectrum of backgrounds, including business leaders, retirees, asset managers, consultants, and individuals with ordinary professions. Several of us can be found high on the list of the top 100 shareholders of the company. Despite a deliberately restrained media strategy, we have achieved coverage in Norwegian, American, and Korean press. We are aware that key figures within the company are aware of our engagement and are following our activities – something we appreciate.

Actions Taken

This week, we sent a letter to REC requesting a meeting with the board as soon as possible and before the presentation of the Q4 results. All members of the initiative signed the letter with their full names. In addition, we have engaged in active dialogue with other investors, who have also signed the letter.

Next week, we will hold an internal meeting to discuss the stock exchange announcement and our next steps. Three of us will also meet with a lawyer to review legal aspects related to the situation.

The Path Ahead

Determining whether or when it is appropriate to demand an investigation, and identifying which measures best safeguard shareholder interests, are complex and demanding considerations.

One hypothesis is that the company may be working on a targeted share issue involving a financial or strategic investor, a potential bid for the company or its assets, or governmental support. It is not certain that an ongoing investigation in such a scenario would benefit shareholder value, but it is evident that it would consume significant management resources. How the majority shareholder might respond is also uncertain.

Our Preparations

We are preparing for all possible outcomes and are considering measures such as legal action, convening an extraordinary general meeting, initiating an investigation, strategic media engagement, and strengthening dialogue with other shareholders. These tools represent the avenues we see as viable in our efforts to protect shareholder interests.

One thing is certain: we will demand at least one new board member, though it seems likely that as many as three may be required.

Wishing you a continued good weekend,

MakeRECgreatAgain