MEMC ends solar wafer pact for $120 million

2011-07-01T09:56:00Z 2012-03-08T16:04:38Z MEMC ends solar wafer pact for $120 millionBY JEFFREY TOMICH • > 314-340-8320

MEMC Electronic Materials Inc. will receive $120 million in exchange for agreeing to terminate a solar wafer supply agreement with China'-based solar panel maker Suntech Power Holdings Co.

O'Fallon, Mo.-MEMC will keep $53 million of cash that was deposited by Suntech under the 2006 supply agreement. MEMC will also be able to draw on a $67 million letter of credit established by Suntech in four installments through April 2012, the companies said separately on Friday.

The original 10-year supply agreement called for MEMC to supply solar wafers to Suntech through 2016.

A decline in silicon prices beginning in 2009 led the companies to amend the agreement, but "challenges" involving Suntech's purchase obligations ultimately led to the agreement being dissolved, MEMC said.

MEMC has diversified its solar wafer customer base since early 2009 such that solar wafer sales to Suntech, which used to constitute half of the MEMC's solar business, had fallen to 2 percent in the first quarter.

MEMC is still assessing the effect that the contract termination will have on its second-quarter and 2011 earnings.

Read more from Jeffrey Tomich, who covers energy and the environment for the Post-Dispatch. Follow him on Twitter @jefftomich and the Business section @postdispatchbiz.

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