A U.S. court has ruled against SolarWorld, Germany’s biggest maker of photovoltaic solar panels and equipment, saying a U.S. client is entitled to $770 million (€681 million) in damages for an unfulfilled delivery contract, in what could be a fateful decision for the once high-flying German tech firm.
Solarworld’s shares fell 10 percent in Frankfurt trading to €5.40.
For Solarworld, the ruling could be a disaster, if it is not overturned on appeal.
The U.S. District Court in Michigan sided with Hemlock, a U.S. semiconductor maker based 115 miles (185 kilometers) north of Detroit, which had sued SolarWorld for failing to deliver on a contract for silicon, a key ingredient in solar panels. In his ruling, Thomas L. Ludington, the judge, said Hemlock, which is based in the Michigan town bearing its name, was entitled to the full damages it sought from Bonn-based Solarworld.
For SolarWorld, the ruling could be a disaster, if it is not overturned on appeal.
In its annual report, SolarWorld had said a negative outcome in the U.S. court case would have consequences up to and including those of an “existential” nature. The $770 million is about four times the liquid assets of the German company, which has not set aside reserves to pay the judgement.
Even after its most recent restructuring, SolarWorld still has €217 million in net debt. The German company declined to comment on the court ruling to Handelsblatt, but plans to make a statement later today.
Frank Asbeck, the SolarWorld chief executive, has repeatedly said he expected no increase in risk to the company if it lost in U.S. court. At the company’s annual shareholders’ meeting about a month ago, Mr. Asbeck said Hemlock won’t be able to seize SolarWorld’s assets in Europe because its claim would violate European cartel law. He also told shareholders that SolarWorld’s U.S. subsidary had no assets that Hemlock could seize.