REC secures NOK 1.2 billion wafer sale; receives compensation for terminated contract

Under the two year agreement, REC will deliver wafers worth approximately NOK 1.2 billion (around USD$200 million; €152 million) from the beginning of next year to the end of 2012.?? The agreement is reportedly structured as a two year take-or-pay contract and wafers will be delivered based on the prevailing market prices.

REC says it has received the first installment of a prepayment totaling approximately 10 percent of the estimated contract value.?? As the company’s wafer production continues to grow, it says that it expects to increase shipments under its existing long-term wafer sales contracts, as well as further broaden its customer base. Next year, it hopes to deliver wafers to around 12 to 15 external customers.

Terminated wafer contract

Meanwhile, REC is to received €39 million for a terminated wafer contract with an unidentified customer. The two parties have said however, that they will be entering into a new wafer sales contract for 2011.?

REC explained that in the period between 2006 and 2008, it entered into a number of long term take-or pay wafer sales contracts, most of which were supported by bank guarantees. But, it says that due to the weakening market conditions in 2009, the contracts have had to be re-negotiated on an ongoing basis.

As a result, the company has now accepted to terminate one of these contracts and will receive a cash compensation in the fourth quarter this year.