Q-Cells could claim back US$244.5 million from LDK Solar for missing supply obligations

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Major business partners Q-Cells and LDK Solar have fallen out over a significant solar wafer supply deal, which could see Q-Cells claim back US$244.5 million from LDK Solar for missing wafer and polysilicon supply obligations under a contract signed in late 2007. Q-Cells said in a statement that disagreements over the contract supply conditions led to arbitration at the International Chamber of Commerce (ICC) in Paris, yet no amicable settlement has so far been reached.

The 2007 ‘Take or Pay’ supply contract would see LDK Solar deliver more than 6GW of multicrystalline solar wafers to Q-Cells over a ten-year period commencing in 2009 through 2018.

Q-Cells said that this equated to 43,000 tonnes of silicon over the contract period and specifically for 2009, equated to approximately 1,000 tonnes of silicon.

As was typical in 2007 with polysilicon shortages, an advanced payment was made to secure the capacity. Q-Cells noted that it made a US$244.5 million advance to LDK Solar in the beginning of 2008, yet this can be reclaimed in the event of termination of the agreement and is secured by a bank guarantee at a German bank upon first demand.

Apparently, an application by LDK Solar for a temporary injunction to be issued against a drawing down of the bank guarantee was refused by the District Court in Berlin.

In the statement from Q-Cells, it said it would ‘therefore make use of the possibility to draw down the bank guarantee linked to the payment made.’

Q-Cells and LDK Solar are also partners in downstream solar projects in China and Europe.

Two European-based companies are now in legal disputes of supply contracts with Chinese-based firms. China Sunergy is also in legal proceedings against wafer supplier REC.

(To read LDK Solar’s response to the Q-Cells termination announcement, click here.)

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