Exclusive: Solarworld CEO Frank Asbeck breaks silence on Hemlock dispute

pv magazine: Did the ruling in the U.S. surprise you, and what does it mean for Solarworld?

Frank Asbeck: The judge’s decision in Michigan against our German affiliate SolarWorld Industries Sachsen was recently announced. I find it absurd, both the lawsuit itself and the amount. But for Solarworld, this initial judgment changes absolutely nothing.

pv magazine: You’ve announced that you’ll appeal. Is that still your position?

Asbeck: Of course, the whole thing will move to appellate court. I think that’s always been clear to everybody, to both to Hemlock and to the judge. It’ll be another year before we get a final ruling in the U.S. And even then it won’t be enforceable against us.

pv magazine: You’re sticking to your argument that the supply contract with Hemlock violates European antitrust legislation. Can you briefly explain what exactly about the supply contract was against EU anti-trust law?

Asbeck: The old take-or-pay contracts at issue were concluded at a time when silicon suppliers wouldn’t sell you anything unless you agreed to exorbitant prices, sometimes 20 times today’s price. You either agreed to multi-year purchasing commitments or you didn’t produce. It’s as if your telephone provider today wanted you to pay the same unit price for a phone as when they were the all-black rotary-dial models supplied by a single provider. But the decisive factor is that the Hemlock contracts contain several clauses that drastically violate antitrust legislation.

pv magazine: Why, in your opinion, did the U.S. judge disregard this argument in the initial trial?

Asbeck: Since European antitrust legislation is applicable in this case, the American judge indicated that the issue should be dealt with in the appeals court. That is exactly what will happen – at the latest in a German court – if Hemlock tries to enforce its claim for damages in Germany.

pv magazine: Do you think that during the appeal process the antitrust argument will get a closer look?

Asbeck: A U.S. ruling can only be recognized in Germany if it is consistent with the principles of the German law. Part of that is antitrust legislation. At that point, at the latest, this central argument will be recognized.

pv magazine: How long is a recognition procedure likely to take in Germany?

Asbeck: A potential recognition procedure, like the appeal process, would take about a year.

pv magazine: Why hasn’t Solarworld managed to reach an out-of-court settlement with Hemlock yet?

Asbeck: We are absolutely confident that we can reach a settlement with Hemlock, just as we have with all of our other silicon suppliers. We are not in a hurry.

pv magazine: Have the chances of an out-of -court settlement gotten worse since the verdict?

Asbeck: No, not at all. As I said, the verdict doesn’t change anything. Apart from that, I assume that both sides will want to put this issue behind them at some point.

When Hemlock filed suit against Deutsche Solar in March 2013, it wanted USD 83 million in damages. Now, some three years later we’re at USD 793 million because, among other things, Hemlock is demanding 12 percent interest on the damages. Are those realistic figures?

Of course not. Nothing in this calculation is realistic. The 100 million in payments we made years ago is more than enough to cover any potential loss at Hemlock.

The Solarworld 2015 annual report stated that the legal dispute was not expected to have any short-term effects, but that over the long term a potential unfavorable ruling may present a risk to the company’s continuation as a going concern. Now that the verdict has come out, do you still see it that way?

We assess the risk as low, both in the short term and the long term. But the risk assessment of a publicly traded company has to specify what could happen if things turned out completely differently than could be humanly expected. That goes for both technical risks and legal ones. In nearly every annual report, you’ll find so-called risks to the company as a going concern. What’s important is whether those risks are high or low. And in this case, according to the opinion of an external evaluator, the risk is clearly low.

pv magazine: Why hasn’t Solarworld set aside any provisions for this legal dispute up to now?

Asbeck: For a business risk in the “low” category, setting aside a multi-million-euro provision would be completely disproportionate.

pv magazine: If you work out a solution to the anti-dumping dispute with Hemlock and the U.S. Commerce Department, couldn’t that also solve this lawsuit, or at least reduce the damages? Why don’t you take that route?

Asbeck: The two issues are not legally connected. It is a fact, however, that after China put Hemlock under pressure, the company called on us to give up U.S. manufacturers’ protection against illegal dumping. If we had accepted, there would no longer be a solar manufacturing industry in the U.S.

pv magazine: The stated goal for this year is to get back up to around a billion in revenue again for the first time since 2011. Will SolarWorld do that?

Asbeck: We just released some very good figures and increased our global sales in the first half by 50 percent. We are also the market leader in several markets, everywhere where quality and sustainability count. We’ll reach the billion in revenue. The international price level concerns us, however. Now that China has put the brakes on installations, the markets are being flooded with Chinese overcapacity.

pv magazine: The U.S. market in particular is hugely important to Solarworld’s business right now. What developments do you expect there over the next few months?

Asbeck: The U.S. market will continue to grow. With our made-in-the-USA products and high-performance bifacial modules, we’re a top supplier for customers who value quality, performance and durability, and we want to broaden our market position.

pv magazine: If a court orders Solarworld to pay damages in the U.S., would that have an impact on the Solarworld Americas subsidiary and the production facility in Oregon?

Asbeck: No, not at all. Solarworld Americas has nothing to do with the case. The lawsuit is against our German subsidiary, SolarWorld Industries Saxony, the former Deutsche Solar. It has no assets in the United States. There is no legal venue that can reach from the U.S., through Germany, and back to the U.S. And apart from that, we just don’t see the court handing down any enforceable damage claim.

The interview was conducted by Sandra Enkhardt.

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