Nov. 6 (Bloomberg) -- LDK Solar Co., the solar-wafer maker that’s reported five straight quarterly losses, agreed to terminate a contract to supply products to Sumitomo Corp. for a $33.4 million settlement.
The Chinese manufacturer under the original contract was to supply wafers used in making solar cells from 2009 to 2016, while Japan-based Sumitomo prepaid a portion of the contract value, LDK said today in a statement.
The contract ends as the industry is facing an oversupply and declining profits. The average price of multicrystalline wafers has plunged 21 percent this year to 88 U.S. cents a piece, according to Bloomberg New Energy Finance data.
“We are pleased to have reached a mutually agreeable conclusion to our 2008 wafer supply contract with Sumitomo” and will work with customers to tackle “current industry challenges,” Peng Xiaofeng, who stepped down as LDK’s chief executive officer yesterday and remains as chairman, said in the statement.
LDK, based in Xinyu, Jiangxi, said it is evaluating the financial impact of the termination on its earnings this year. The company in September reported a fifth straight quarterly loss of $254.3 million in the three months ended Jun. 30.
Sumitomo spokeswoman Sayaka Ito confirmed the termination of the contract and that it agreed to pay LDK $33.4 million. She declined to say why the contract was ended, citing confidentiality.
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