MEMC, Conergy agree to terminate wafer supply contract
Sep 26, 2012 - US silicon wafer maker MEMC Electronic Materials Inc (NYSE:WFR) said Tuesday it had reached an agreement to terminate a long-term solar wafer supply contract with German solar equipment maker Conergy AG (ETR:CGYK).
The supply deal was signed between MEMC, its MEMC Singapore Pte Ltd subsidiary and Conergy in October 2007. Under its terms, MEMC agreed to supply solar wafers to Conergy over a period of 10 years at pre-set prices. Conergy had made advance payments to MEMC in the form of a refundable capacity reservation deposit and also provided a letter of credit to secure the take-or-pay obligations envisaged in the contract.
The companies have decided to terminate the agreement as Conergy has been struggling to meet its price and volume purchase obligations due to the overall market downturn since 2009. In January 2010 the parties agreed to reduce the size of the supply agreement.
Under the terms of the termination agreement, MEMC will receive USD 21.2 million (EUR 16.4m) through the letter of credit established by Conergy under the original deal. MEMC will pay back the refundable capacity reservation deposit to Conergy. The German company will also have to make outstanding payments in the amount of USD 5.5 million to MEMC.
Moreover, Conergy will transfer to MEMC its portfolio of operations and maintenance contracts for a combined 175 MW of solar power plants in Germany, Italy and Spain. The transfer of these contracts is still subject to due diligence by MEMC.