Lawyer Up! Q-Cells Nixes LDK Solar Deal

NEW YORK (TheStreet) -- LDK Solar(LDK Quote) shares were taking the biggest hit among the solars on Monday after a supply dispute aired in public.

German solar behemoth Q-Cells announced in a press release that it terminated a solar-wafer supply agreement with LDK because "LDK did not fulfill significant contractual obligations." LDK responded in its own release, saying it "vigorously disagrees with Q-Cells' claims," later adding that it "believes this termination is without any valid basis" and saying "that [LDK Solar] has performed substantially on all of its obligations" under the deal.

With the dueling press releases in the open, it seemed investors were not liking the litigious hostilities, sending LDK shares plummeting by more than 20%, or $1.37, to $5.41 in the afternoon.

The dispute arose out of a 2007 supply agreement -- entered into before the now-low prices for polysilicon took hold of the market -- which called on LDK to supply solar wafers to Q-Cells between 2009 and 2018. Q-Cells, in turn, made a prepayment worth $244.5 million, which it is now attempting to claw back by claiming proper termination and drawing on a bank guarantee.

Q-Cells said LDK tried to force a temporary injunction, keeping Q-Cells from drawing down on the guarantee, though the District Court in Berlin turned down the application. In its own statement, LDK said the court lifted an original injunction without actually making a determination on the question of the validity of the termination. LDK added that it sees any drawdown to be "wrongful."