Hemlock Sues SolarWorld Unit for Supply Contract Breach

Hemlock Semiconductor Corp., the largest U.S. provider of polysilicon, sued a unit of Solarworld (SWV) AG, alleging it breached a contract to buy $83 million in material used to make solar cells.

Hemlock, a joint venture of Dow Corning Corp. and other companies, said Solarworld’s Deutsche Solar GmbH stopped buying polysilicon in 2012, violating a long-term supply agreement. Deutsche Solar had sought price and quantity concessions before stopping purchases, Hemlock said in a complaint filed today in federal court in Bay City, Michigan.

Solarworld Chief Executive Officer Frank Asbeck threatened to put Deutsche Solar into bankruptcy if Hemlock didn’t agree to the concessions, according to the filing.

“Mr. Asbeck further threatened that Solarworld AG would seek to re-purchase Deutsche Solar’s assets out of bankruptcy for a de minimis amount and proceed with its solar panel business, thus freed of the supply agreements,” Hemlock said in the complaint. “Asbeck stated that Hemlock would then have little recourse but to attempt to recover against a bankrupt and assetless debtor.”

Hemlock said the contract requires Deutsche Solar to pay for the product it agreed to purchase, even though it hasn’t taken delivery on it.

Germany’s Largest

Solarworld, based in Bonn, is Germany’s largest maker of solar panels. Ben Santarris, a spokesman for SolarWorld Industries America in Portland, Oregon, wasn’t immediately available to comment on the suit.

Hemlock is jointly owned by Dow Corning, Shin-Etsu Handotai Co. and Mitsubishi Materials Corp. Jarrod Erpelding, a spokesman for Dow Corning and Hemlock in Midland, Michigan, declined to comment on it.

The case is Hemlock Semiconductor Corp. v. Deutsche Solar GmbH, 13-11037, U.S. District Court, Eastern District of Michigan (Bay City).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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