Suntech ends solar wafer agreement with MEMC

Suntech Power Holdings Co. Ltd. (NYSE: STP) and MEMC agreed to end a solar wafer supply agreement entered into in 2006.

The agreement was supposed to run through 2016, but because of rapid changes in the silicon wafer market, the companies mutually decided to terminate the contract. Suntech expects to incur $212 million of expenses related to the terminated supply agreement in the second quarter of 2011, including $67 million that will be additional cash outlay and $53 million will be relinquished in prepayments made to MEMC.

Suntech is no longer required to purchase approximately 4.6 GW of wafers between 2011 and 2016. Separately, Suntech will discontinue its investment in CSG Solar AG, a unit of Suntech dedicated to the research and development of specialized crystalline silicon thin film technology, and incur a one-time, non-cash charge of approximately $24 million in the second quarter of 2011.

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