REC ASA - Moser Baer has no legal right to terminate contract
Sandvika, February 12, 2010: Moser Baer Photo Voltaic Ltd. ("MB") has no legal right to terminate the wafer contract entered into with REC in 2007. As reported in the interim report for the fourth quarter 2009, REC has agreed to make adjustments to sales contracts and in some cases called upon bank guarantees to protect its interest. In the case of MB, REC called upon the bank guarantee to cover outstanding receivables already in October 2009, and REC will continue to enforce its rights under the contract.
REC announced the 8-year contract with MB on July 26, 2007, in which annual volumes are scheduled to increase over time to a peak at around 60 MW per year.
On February 10, 2010, MB announced that they had terminated the contract, due to alleged quality issues. For the same reasons, the company tried to prevent REC from calling upon the bank guarantees. This attempt was denied by an Indian court although this is subject to appeal. REC has currently USD 36.5 million worth of receivables outstanding towards MB and the total available bank guarantees under the contract amounts to USD 85 million.
Legal proceedings will continue, although Moser Baer in REC's opinion has no legal right to terminate the contract.
REC is the leading vertically integrated player in the solar energy industry. REC Silicon and REC Wafer are among the world's largest producers of polysilicon and wafers for solar applications. REC Solar is a rapidly growing manufacturer of solar cells and modules, and is also engaging in project development activities in selected segments of the PV market. REC had revenues of NOK 8 191 million and an operating profit of NOK 2 529 million in 2008. More than 3 000 employees work in REC's worldwide organization. Please visit www.recgroup.com to learn more about REC.
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)