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nanofrogfish_spf

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Thursday, December 13th 2012, 5:05am

LDK Solar Announces Arbitration Award

Just saw this news announcement...looks like LDK got awarded about $40M ($30M plus their $10M deposit) from CSIQ for breaking wafer contracts in 2007/2008.

The 2007 contract expired in 2010, but the 2008 contract was for 10-yrs, at 80MW/year. So the question I have is, is this the final settlement amount, or is CSIQ still obligated to buy 80MW/year of wafers from LDK for the next 6-years (not sure how the pricing agreement was structured back then, but it's obviously way above current market prices)?

nanofrogfish_spf

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Thursday, December 13th 2012, 6:25am

I think this was a take or pay contract, so this arbitration award should be the end of it...

odyd12

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Thursday, December 13th 2012, 7:07am

This is the final arbitration reward. They will get $30M from CSI. I am sure CSI will pay it, as if the gov't decided this they will not want to play a hard ball with them. However CSI will never pay the Solar Wafer for their contract. It could be a lot of pressure on CSI, but by rights they should never see SolarWorld to collect anything. This amount was a lot more.

PV-Opt

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Yesterday, 6:56pm

The contract with Deutsche Solar is small, only EUR180 about $236. Below is I what found from online. I think their contingency estimate is about right.

Nano, Odyd, your thoughts?


Canadian Solar and SolarWorld Group Enter into 180 M Euro Supply Contract
January 25, 2007 | Post Your Comment

Jiangsu, China [RenewableEnergyAccess.com] Canadian Solar Inc. (CSI) signed a long term supply contract with Deutsche Solar, the wafer manufacturing subsidiary of Solar World Group of Germany in which Deutsche Solar will supply to CSI approximately 180 million Euro [US$ 233.4 million] worth of Solsix-Multi 6-inch wafers over a 12-year period. Initial deliveries will start immediately, with full annual quantity deliveries to commence in January of 2009. CSI and Solar World Group have worked together for the past two years, during which time CSI has been providing recycled silicon feedstock for Deutsche Solar to turn into wafer on toll manufacturing basis.

nanofrogfish_spf

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Today, 7:39am

The contract dispute with LDK and Solarworld are discussed in their form 20-F (available on their website dated 4/27/12), on pages F41 thru F43.

In regards to LDK, in arbitration LDK wanted about $63 Mil. plus the $10 Mil. deposit. They got about $30 Mil. plus the deposit. CSIQ made provisions for the $10 Mil., but not the rest (their comment; "The Company believes the allegations are without merit and that the potential for additional loss is remote and, accordingly, has not recorded an additional liability associated with such lawsuit."). So if they decide to pay it and not take this any further, they would take the hit in Q4 or Q1.

In regards to Solarworld, it looks like Solarworld is the one who terminated the contract in December 2011. Little more complicated on the loss contingencies (better just to read their verbiage). There is no mention of any court proceedings, only that; "In the notice, Deutsche Solar AG also reserved its right to claim damage of Euro148.6 million in court". I could not find anything on court proceedings since the release of this 20-F.

PV-Opt

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Today, 9:56am

Thanks Nano!

The only thing I found similar to CSIQ and Deutche Solar is CSUN's suit against REC and by mediation CSUN ended up paying a small amount that was not disclosed. The court is in Norway though. In German court, not sure how it will go.

Looks like CIETAC's arbitration is end game and CSI is obligated to pay. I read that from CIETAC's web site about the enforcement of its arbitration.

odyd12

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Today, 9:59am

we had an article published describing some details about this litigation
https://solarpvinvestor.com/spvi-news/191…t-cancellation-
I think that depending on the political climate, CSIQ could lose, but chances to recover damages by Deutsche (or amounts not yet paid by CSIQ to Deutsche Solar) are slim. LDK will be paid out. Survival of LDK is a challenge which is supported by government, so CSIQ is bound to assist. On the other hand SolarWorld is the single reason of tariffs in the US and European investigation. I am certain there will be no penny more spent on this by any Chinese entity. I would imagine there is a heavy solicitation to isolate and destroy SW on global arena. SW may have gathered anti-Chinese proponents under its name, so it is a matter of which camp is larger. China's 40GW is offering huge opportunity to foreigners and SW offers nothing more than Chinese already have. So the expectation is that SW will be gone sooner than later.

PV-Opt

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Today, 10:41am

Excellent analysis. Thank you Odyd!