As restructuring continues at Conergy AG, the PV module manufacturer has been in talks with MEMC to renegotiate its long-term solar wafer supply contracts worth approximately US$4 billion over a ten-year period, since the beginning of the year. However, an agreement has yet to be struck, resulting in Conergy warning that it may start legal proceedings to cancel the contracts.
Conergy said in a statement that the fall in polysilicon prices had turned the market from a ‘seller’s to a buyer’s’ and that legal doubts had emerged over the enforceability of some contractual provisions of the contract, without specifying what these provisions maybe. As a result, the contracts could be invalid, according to Conergy.
The module manufacturer wants a new one-year deal struck with MEMC in the next few days, otherwise legal action will begin.
“Conergy’s profitability comes first for us,” said Dieter Ammer, Chief Executive Officer of Conergy AG. “The contract with MEMC signed by the previous management board does not reflect in any way the very strong decline in market prices for wafers. In addition, we have strong doubts about the legal structure of the contract. We would be prepared to accept the high costs of cancelling the contract because, on the one hand, they are not cash-effective and, on the other hand, they would improve Conergy’s profitability on a sustainable basis onwards. Of course, we would prefer an amicable solution.”
The company said it had already written down the prepayments made to MEMC in its annual accounts and could expect high one-time costs, but it would ‘open up new options for the future.’
Conergy also stated that preliminary first-quarter results were approximately 70% below the same quarter of 2008, estimated at €65 million. However, improvements in business were noted in March, yet the management board was not confident that annual revenue for 2009 would meet or exceed 2008 levels.