The Initiative’s Letters to REC – Questions that remain unanswered

In previous posts, we have referred to our attempts at communication with the company and the lack of response. In the interest of full transparency, we have now decided to publish the letters that we, as a group, have sent to the company. These are letters containing questions and requests for information that, to this day, remain unanswered

We would like to emphasize that it has never been our expectation for the company to respond directly to us as a small group. Rather, our view has been that the company should address these matters by providing information to all shareholders.

We also note that the letters reflect the opportunities and strategies we as a group considered appropriate at the time they were sent — strategies may since then have evolved.

Letter of January 23

Below is the letter sent on January 23 of this year. It was signed by 13 individuals collectively representing between 16 and 17 million shares:

To the Chairman of the Board, REC Silicon 

Subject: Shareholder Concerns and Request for Meeting 

Dear Mr. Tae Won Jun, 

We are a group of shareholders in Rec Silicon that controls approximately 16 million shares. We are united to safeguard our own and other minority shareholders' rights. We have a long-term investment perspective, with several members holding shares for over a decade. 

Over recent weeks, our initiative have received written support representing an additional 58 million shares through an online platform - https://www.recsiliconinvestors.com/. Additionally, we have engaged in discussions with even more shareholders, who have expressed sentiments that mirror ours, we thus expect them to support our intentions at an Extraordinary General Meeting (EGM). Collectively, we would represent a substantial proportion of shares/votes. 

It should come as no surprise to the Board and leadership team that many shareholders have expressed frustration over the lack of transparency and information from the company since Hanwha became a major shareholder in 2022. Over time, employees or former employees of the largest shareholder have assumed two out of three positions in group management. Additionally, the nomination committee, which controls the selection of independent board members, is dominated by individuals with ties to the parent company. Furthermore, the largest shareholder holds two board seats.

Our intentions are constructive: we aim to enhance the value of Rec Silicon, ensuring that all shareholders receive timely and relevant information to facilitate their independent risk assessments, evaluations, and decisions. Unfortunately, the absence of critical information from the company has made this impossible.

Considering this, we intend to propose two agenda items at an upcoming EGM: 

1. Changes to the Board composition 
2. A comprehensive investigation into the company’s operations and governance 

Prior to calling for an EGM, we request an immediate meeting with the Chairman of the Board, and at least one independent Board member. We believe such a meeting would be instrumental in addressing key shareholder concerns. The company’s leadership team should also participate. 

During this meeting, we aim to discuss our main concerns and establish a foundation for improved communication and transparency. Ideally, this would culminate in a comprehensive update provided to all shareholders as part of the Q4 2024 presentation or through a dedicated session soon thereafter. 

Our primary concerns include the following, but are not limited to: 

1. Corporate governance, cost control and risk assessment 
2. The business case and associated risks for the Moses Lake startup, including lessons learned from the Yulin project 
3. The off-take agreement with Q-cells overall and specifically related to termination clause and selection of production testing site and quality and changes to the original contract.
4. Root causes of startup challenges 
5. Avoiding fire sale of assets and obtaining the ability to attract silane customers
6. Overall company strategy going forward, including financial roadmap

We trust that the Board will take this opportunity to address these matters comprehensively. Should the provided information satisfy our expectations, we are prepared to consider whether to skip the proposal for an investigation in the EGM agenda. However, the agenda item regarding Board composition will remain. 

We appreciate your immediate attention to this matter and look forward to your prompt response regarding a suitable meeting date that is set no later than end of January. 

The letter was answered relatively promptly by CEO Levens, despite having been addressed to the Chairman of the Board. However, the response did not attempt to address the points we had raised; it merely requested further clarifications. Accordingly, we sent a follow-up letter, dated January 31, signed by the same group.

Letter sent January 31

Dear Mr. Levens, CEO,

Firstly, thank you for responding on behalf of the Chairman, Mr. Tae Won Jun.

That said, we still expect the Board of Directors (BoD) to engage directly with shareholders. Clearly, the BoD has an obligation to act in the best interests of shareholders.

We also want to highlight the growing lack of confidence in both management and the BoD, particularly following the positive guidance provided in September, which was subsequently followed by multiple actions that have eroded shareholder value. Furthermore, we are disappointed that the company has not shown the courtesy of addressing shareholders in person during a Q4 session or via a conference call where shareholders are able to ask direct questions themselves.

Our letter is a constructive attempt to seek information. After consulting with legal advisors, we understand that this is information that we are entitled to as shareholders, and that you are obligated to provide it. Alternatively, we will continue using alternative channels, such as communication through https://www.recsiliconinvestors.com/ and media outlets in both Korea and the U.S., to request or press for information.

Additionally, we are aware that we can call for an extraordinary general meeting where we can submit our questions alongside other agenda items.

We are encouraged by the rapid growth of our initiative, which now includes almost 800 shareholders. This demonstrates that our concerns and requests for information are widely recognized and shared among investors.

We look forward to having our questions addressed during the Q4 presentation. As shareholders, our primary concern is to ensure that the company and its management operate in full compliance with all applicable laws and regulations. At the same time, it is essential for REC’s management and BoD to acknowledge and adhere to Norwegian corporate legislation and democratic principles.

We kindly request that you provide responses to the following questions in light of the Norwegian Public Limited Liability Companies Act (“Allmennaksjeloven”) §§ 6-12 to 6-14:

1. What is the total capital expenditure incurred to date in the effort to qualify the product from Moses Lake? Who approved the overspending beyond the previously communicated $160 million CAPEX—was it the BoD or management?
2. What quality-related changes (e.g., mono, high purity, ultra-high purity) have the Board of Directors and/or management approved from the restart of Moses Lake, following the offtake agreement, and up until late 2024?
3. The company has previously communicated certain impurity-related challenges with the product. Can you provide specific updates on the latest developments and clarify whether impurity levels have been the primary obstacle in qualifying the product? 

In the Q2 2021 presentation, the company shared results from Yulin regarding metal content. Could you provide a similar graphical representation for the product from Moses Lake?

1. If the customer had not selected China as the country for the production test it is reasonable to assume that there would have been no customs delays. Within the terms of the agreement, would REC have had the opportunity to submit another sample from the alternative production line in Moses Lake?
2. Since entering the supply agreement in September 2023, there have evidently been changes and/or adjustments. Who in REC Silicon has legally approved these changes regarding timeline, quality, and financial terms?
3. Considering the stock exchange notice dated January 24^th, 2025, who at REC has legally approved the termination of the contract (BoD, management?) and has a specific contract termination clause been used?
4. With reference to the above, who at REC legally approved the new loan agreement?
5. It has been stated that the previous $25M + $25M loan was rolled into the new financing arrangement and secured by company assets. What specific assets have been pledged, and were the previous loans also secured?
6. What would be the approximate contractual minimum price per kilogram of polysilicon produced at Moses Lake, as a percentage of the current market price for polysilicon from OCI Malaysia?
7. What is the company's strategy going forward, including financing, production timelines, anode supply, and governmental support?

From our perspective, there are no contractual or legal grounds for the company to withhold responses to these questions If all questions are adequately addressed during the Q4 presentation, that would be acceptable to us.

We maintain our request for a meeting with the BoD and management. At a minimum, we expect the Chairman, an independent BoD member, and the CEO to be present. We need assurance that there is a clear alignment of interest among all stakeholders. Furthermore, we would like to discuss the potential appointment of additional BoD members to represent shareholder interests, and we assume that the Chairman can carry a proxy from the principal shareholder regarding this matter.

We invested in REC with the goal of supporting the company’s success as a supplier to key technological megatrends, including solar energy, battery technology, and semiconductor applications. Neither we nor REC should waste time and energy debating an extraordinary general meeting or investigating past actions. However, we firmly believe that the BoD must be strengthened with additional members to adequately represent shareholder interests.

We look forward to your prompt response ahead of the Q4 presentation, confirming that our questions have been received and will be addressed, as well as confirming a date immediately following the 4Q presentation for a meeting with the members of the BoD mentioned above, yourself and representatives of this initiative.

We also wish you the best of luck in ensuring transparency during the Q4 presentation and in providing clear and comprehensive answers to our inquiries. 

Still waiting…

Despite multiple follow-ups through Investor Relations and a formal letter addressed to the Chairman on April 3rd, we are still awaiting a response.

We originally considered the Q4 presentation to be a natural forum for addressing these and other questions raised by fellow shareholders. Unfortunately, this did not occur. Nevertheless, we continue to assert our rights as shareholders and expect the company to address these matters no later than in the Q1 presentation.

We understand that this presentation will also be held digitally — a decision we deeply regret, not least because previous digital formats have resulted in the filtering or censorship of critical questions.