May 27 2008
Suntech Power Holdings Co., Ltd., one of the world's leading manufacturers of photovoltaic (PV) cells and modules, today announced that it has acquired a minority stake in Shunda Holdings Co. Ltd, a manufacturer of solar wafers based in China, from Actis, a leading private equity investor in emerging markets, and Waichun Investment Fund, for a total consideration of $98.9 million.
Suntech also announced that a definitive thirteen-year silicon wafer supply agreement has been signed with a subsidiary of Shunda Holdings Co. Ltd. Under the terms of the supply agreement, Shunda will supply Suntech specified annual volumes of silicon wafers with a total volume of approximately 7GW from 2008 to 2020.
Dr. Zhengrong Shi, Suntech's Chairman and CEO, said: "This strategic investment and long term supply agreement will be instrumental in the profitable and rapid growth of both Suntech and Shunda. This is another example of how we can leverage funds raised through our recent convertible notes offering to pursue strategic investments and high volume contracts that strengthen the long term cost structure of our business model. We believe that these transactions accelerate Suntech's path to grid parity and significantly enhance Suntech's long term cost competitiveness through better pricing and volume allocations. The multi-year commitment to purchase silicon similarly provides Shunda with the security and visibility to focus on expanding a world-class polysilicon plant."
Shunda produces silicon ingots and wafers and currently supplies a number of major producers of PV crystalline cells and modules. Shunda is in the final stages of building a world-class polysilicon plant in Yangzhou, Jiangsu province, China with a first phase capacity of 1,500 metric tons. Shunda intends to initiate production of solar grade polysilicon in the third quarter of 2008. The polysilicon plant will utilize the advanced Siemens production process, with a closed-loop recycling system, and employ equipment and engineering services from industry leading vendors including GT Solar Incorporated.
Dr. Shi remarked, "Located in our home province of Jiangsu, Shunda's proximity to Suntech will enhance the synergies that we can achieve by integrating polysilicon refinement right through to the manufacture of premium quality solar modules. Shunda's clear commitment to maintaining the highest environmental standards in the production of polysilicon was another key factor considered in the lead up to this partnership. We look forward to building a close and mutually supportive relationship with Shunda."
Mr. Yunda Ni, Shunda's CEO said, "We are delighted to enter this partnership with Suntech, a world leader in the solar industry. This long term contract will provide a stable foundation for Shunda to expand our polysilicon and wafer production facilities and help establish Shunda as a premier manufacturer of both polysilicon and silicon wafers. Our polysilicon plant is designed to employ proven technology and production techniques in order to achieve the highest standards of clean manufacturing. We look forward to making a growing contribution to the development of the solar industry."
Commenting on Suntech's improved silicon outlook, Dr. Shi continued, "The relatively small quantities of silicon wafers to be supplied in 2008 from Shunda will replace some of our higher-priced spot market silicon and will make an important contribution towards the completion of our 2008 production target of 530MW. With this long-term agreement, we are able to increase our silicon secured for 2009 by 50MW to 800MW of silicon with an average cost more than 20% below our average cost of silicon in 2007."