Sumitomo agrees to pay LDK Solar $33.4M in exchange for terminating supply agreement.
Officials at LDK Solar Co. Ltd. announce that it has reached an agreement with Japan-based Sumitomo Corp. to terminate their long-term solar wafer supply agreement.
Under the terms of the agreement, originally signed in September 2008, LDK Solar was to supply multicrystalline silicon wafers to Sumitomo over an eight-year period, beginning in 2009 and extending through 2016. As part of the original agreement, Sumitomo made an advanced payment representing a portion of the contract value to LDK Solar.
In exchange for LDK's agreement to terminate the supply agreement, Sumitomo has agreed to pay LDK Solar a settlement amount totaling $33.4 million.
"We are pleased to have reached a mutually agreeable conclusion to our 2008 wafer supply contract with Sumitomo," states Xiaofeng Peng, chairman, LDK Solar. "We look forward to establishing a new commercial relationship with Sumitomo. We will continue to work closely with our customers and partners as we navigate the current industry challenges."
LDK Solar is assessing the financial impact on its full year 2012 earnings of the Sumitomo termination and related contract termination charges.