LDK Solar responds to Q-Cells announcement of unilateral contract termination

LDK Solar has responded to Q-Cells' announcement of its unilateral termination of the solar wafer supply agreement concluded with LDK in December 2007. Q-Cells has claimed that LDK has not fulfilled significant contractual obligations under the supply agreement, and now the Chinese company has come out with a rebuttal statement.

"During rounds of discussions and negotiations, LDK Solar has clearly stated to Q-Cells that it has not only procured feed stock for the manufacturing of the solar wafers under the contract, but has also manufactured the requisite quantities of the solar wafers ready for shipment to Q-Cells at its indication of willingness to accept," the statement begins.

"LDK Solar made deliveries during the first quarter of 2009 pursuant to purchase orders of Q-Cells under the supply agreement," the statement continues. "Subsequent to March 2009, LDK Solar suspended deliveries at the request of Q-Cells in order to engage in various negotiations with Q-Cells in the interest of reaching a mutually agreeable amendment to the supply agreement."
 
"During the negotiation process, Q-Cells unilaterally claimed, and has now publicly announced, the termination of the agreement. LDK Solar believes this termination is without any valid basis," the statement says.

"The supply agreement provides for LDK Solar to supply solar wafers to Q-Cells on the basis of contractually fixed amounts of polysilicon totaling 43,000 metric tons for the years from 2009 to 2018, with annual wafer supply quantity for 2009 set at 1,000 metric tons at fixed prices under the supply agreement," the LDK statement goes on. "At the beginning of 2008, Q-Cells made a prepayment of $244.5 million pursuant to the supply agreement. LDK Solar has also provided a bank guarantee in the same aggregate amount to guarantee the performance of its obligations relating to such prepayment under the supply agreement."

"LDK Solar firmly believes that it has performed substantially on all of its obligations under the supply agreement, and is ready to perform the additional obligations under the agreement that are currently contingent upon cooperation of Q-Cells, such as its willingness to accept the additional deliveries of
LDK Solar's solar wafers pursuant to the supply agreement," the statement reads. "Q-Cells has indicated in its announcement that it may draw down from LDK Solar's bank guarantee, and LDK Solar believes that such drawdown, if made, constitutes a wrongful drawdown under the supply agreement and violates the purpose of such bank guarantee."

"While the Regional Court of Berlin, in preliminary proceedings LDK Solar instituted in August 2009, initially prohibited Q-Cells from drawing down from LDK Solar's bank guarantee, it subsequently lifted the injunction in view of the nature and purpose of a bank guarantee, without deciding whether the termination by Q-Cells was valid and instead leaving the issue to be determined in the arbitration proceedings," the statement says.

"LDK Solar intends to vigorously defend its rights and interests as a result of Q-Cells' wrongful termination of the supply agreement, breach of the supply agreement and wrongful drawdown from our bank guarantee, including the contractually provided arbitration yet to start at the International Chamber of Commerce," the statement concludes.