South Korea-based solar material provider OCI has terminated two supply contracts with China-based Wuxi Suntech Power and one supply contract with Suntech International. OCI noted that the contract termination was based on Wuxi Suntech's insolvency and restructuring plan disclosed on March 20, 2013 and Suntech International's announcement of provisional moratorium which was granted by the judicial authorities in Schaffhausen, Switzerland on April 10, 2013.
OCI stated that it believes its customer will revive and become a healthier company.
According to OCI, the contract singed on March 24, 2008 with Wuxi Suntech had the amount of US$631.5 million with current balance at US$419.4 million. The August 28, 2008 contract with Wuxi Suntech had the amount of US$751.6 million with the current balance at US$558.7 million. The contract with Suntech International was dated on March 8, 2011 with the amount at US$429 million and current balance at US$390.1 million.
OCI noted that revenues could be affected in the short term due to the termination of these contracts.
The firm recently announced first-quarter 2013 consolidated sales of KRW780.4 billion (US$707 million), representing an on-quarter increase of 10.9% but an on-year decrease of 12.4%. The firm stated first-quarter gross margin was at 13%. However, the firm reported net loss of KRW30.8 billion for the first quarter.
OCI's revenues included sales of polysilicon, petrol, coal chemicals, inorganic chemicals and others. According to OCI, polysilicon revenues accounted for 27% of sales in 2012 while petrol and coal chemical accounted for 35% and inorganic and others accounted for 38%. The firm has been investing in many solar projects in South Korea and expects new business and power generation to account for 30% of total revenues in 2017.
