Shares in PV Crystalox Solar, a solar wafers supplier, rocketed after the firm reached a cash settlement relating to a terminated wafer supply contract that exceeded its market cap.
The €90m sum will be recognised as income for the first half of 2012 by the company, which has seen its market capitalisation plunge by 90% over the last year to £18m before the cash settlement announcement saw its market cap more than double in a single day.
The announcement eased investor concerns over the company's warning that trading condition remains 'extremely challenging' with significant industry overcapacity and high inventory levels maintaining the intense pressure on prices which developed during last year.
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Its spot wafer prices have fallen 70% since April last year, which is below industry production costs. The group, understandably, is not keen on selling at below cost and as a result has so far been unable to reach agreement on acceptable wafer prices and volumes for the second quarter of this year with some of its contract customers.
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Consequently, shipment volumes during the first half of the year are now expected to be in the range of 55 to 70MW [megawatts], which is below the group's earlier expectation of 80-100MW.
"The group continues to believe that the medium-to long-term outlook for solar installations is positive and therefore protecting the group's capabilities and cash for the future remains of paramount importance. The board will continue to review industry conditions on an ongoing basis in order to maintain the best interests of shareholders," the firm's statement said.
PV Crystalox Solar continues to operate at reduced wafer production levels and poly-silicon production remains suspended at the group's facility at Bitterfeld. In parallel the group is accelerating its cost reduction programmes.
The share price rose 119.7% to 9.38p.
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