MANILA, Philippines—Two companies under the Lopez-led First Philippine Holdings Corp. have won an international arbitration case against cash-strapped Korean solar wafer giant Nexolon Co. Ltd. over a soured local solar wafer-slicing partnership.
In the International Chamber of Commerce (ICC) arbitration proceedings, Nexolon Co. Ltd of Korea was ordered to pay $24.8 million in damages and pre-award interest to First Philec Nexolon Corp. (FPNC) and pay another P2.09 billion to First PV Ventures Corp. (First PV) as payment for the “put option” in consideration for First PV’s shares in FPNC.
SCREENGRAB from www.fphc.com
Nexolon–which, however, is reported to be undergoing a corporate rehabilitation process in Korea–was given by the ICC until November 2, 2014 to pay these amounts to the Lopez units.
“First PV and FPNC are considering the options to pursue the enforcement of the Award. Based on reports, it appears that Nexolon is currently subject to corporate rehabilitation proceedings in Korea,” the FPH disclosure said.
Corporate rehabilitation proceedings prevent creditors and suppliers from scrambling for the assets of a company in financial distress. Based on overseas reports, the financial difficulties of Nexolon, a publicly listed Korean company involved in the photovoltaic industry, have prevented the Korean company from paying back debts.
FPNC is a joint venture company established by First PV (70 percent) and Nexolon (30 percent) to slice silicon wafers for Nexolon. First PV is a wholly owned subsidiary of First Philippine Electric Corp., which in turn is a subsidiary of FPH.
In 2012, FPNC brought the case to arbitration, citing the need to enforce its rights under the agreement, including the payment of unpaid sums of money by Nexolon. First PV joined the arbitration as a party to protect its rights under the joint venture with Nexolon.
The $100-million joint venture was put up in 2011 for the purpose of establishing an initial 400-megawatt solar wafer-slicing plant in the Philippines. The newly constructed FPNC plant was set up in the First Philippine Industrial Park in Tanauan, Batangas.
Nexolon had asked the Lopez group to buy out its 30 percent stake in FPNC amid such partnership dispute. Under such “put option,” Nexolon seeks to enforce the sale of all of its shares in FPNC.
Put option gives the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time.
Under the joint venture agreement between FPV and Nexolon, the put option arises as a consequence of a termination of the supply agreement and is available to the non-breaching party. FPNC, however, disputed Nexolon’s notice of breach and claimed that the Korean firm was the one in breach of the agreement.