Conergy Plans To Cancel Solar Wafer Supply Contracts With MEMC

Published: 21-Apr-2009

By: Staff Writer Staff Writer Staff Writer

Conergy AG (Conergy), a Germany-based supplier of solar and other renewable energies, is discussing with MEMC Electronic Materials, Inc. (MEMC) to renegotiate its long-term solar wafer supply contracts worth around $4 billion over a ten-year period, since beginning of 2009. An agreement has yet to be reached, resulting in Conergy warning that it might begin legal proceedings to terminate the contracts.

Conergy also said that the drop in polysilicon prices had turned the market from a seller's to a buyer’s and that legal doubts had emerged over the posibility of some contractual provisions of the contract, without specifying what these provisions may be. As a result, the contracts could be worthless.

Conergy plans a new one-year deal struck with MEMC in the next few days, otherwise legal action will start.

Conergy said it had already written down the prepayments made to MEMC in its annual accounts. Conergy could anticipate high one-time costs, but it would ‘open up new options for the future.’

“Conergy’s profitability comes first for us,” said Dieter Ammer, chief executive officer of Conergy. “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.”

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