China Sunergy says it can withhold bank guarantees

SIOUX FALLS, S.D. (AP) — Solar-cell maker China Sunergy Co. Ltd. said Tuesday that a Norwegian court is allowing it to hold back $50 million in bank guarantees to a wafer provider that merged with another company.

China Sunergy said a preliminary injunction granted by the Salten District Court on Sept. 11 prohibits REC Wafer Norway AS from drawing on the bank guarantees. The original party to the contract, REC SiTech AS, no longer exists given its merger with REC ScanWafer AS, which later changed its name to REC Wafer Norway AS, China Sunergy said.

China Sunergy said it was never informed of this merger despite REC's contractual obligations to do so prior to any such action.

The preliminary injunction is in effect until Oct. 15, and the court stated that China Sunergy and REC Wafer should clarify the legal issues.

China Sunergy shares gained 4 cents to $4.40 in morning trading.