American Superconductor Corporation (NASDAQ:AMSC) Files An 8-K Other Events
Item 8.01 Other Events.
American Superconductor Corporation (the “Company”) and Inox Wind Limited (“Inox”) are parties to a supply contract, dated December 16, 2015 (as amended, the “Supply Contract”). to the terms of the Supply Contract, the Company has agreed to supply, and Inox has agreed to purchase, electric control systems (“ECS”) for use in Inox’s 2 megawatt doubly fed wind turbines. Under the Supply Contract, Inox must forecast future purchase orders of sets of ECS which become firm orders three months prior to shipment, and post irrevocable documentary letters of credit (“Approved L/Cs”) before the Company will ship such orders. Inox is currently delinquent on its obligation to post Approved L/Cs for sets of ECS that Inox forecasted to purchase under the terms of the Supply Contract.
On May 29, 2020, to Section 19.1 of the Supply Contract, the Company sent written notice (the “Default Notice”) to Inox notifying Inox of its default under Sections 3.4 and 3.5 of the Supply Contract due to Inox’s failure to post and maintain Approved L/Cs in the amount of €6.0 million for the payment of ECS that Inox is obligated to purchase under the terms of the Supply Contract, as described in Item 9B of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on June 2, 2020. The Default Notice provided that if Inox fails to post and maintain Approved L/Cs in the amount of €6.0 million in accordance with the terms of the Supply Contract within the 90 (ninety) day cure period after receipt of the Default Notice, then the Company may terminate the Supply Contract by providing written notice of such termination to Inox.
On September 2, 2020, Inox delivered Approved L/Cs in the amount of €1.3 million for the payment of a portion of the ECS that Inox is obligated to purchase under the terms of the Supply Contract.
On September 11, 2020, the Company notified Inox that due to (i) the Company’s business relationship with Inox, and (ii) Inox’s delivery of Approved L/Cs in the amount of €1.3 million as described above, the Company will give Inox until October 5, 2020 to regain compliance with the terms of the Supply Contract by providing Approved L/Cs in the amount of €4.7 million for payment of the remaining ECS that Inox currently is obligated to purchase under the terms of the Supply Contract.
Except with respect to the additional time to regain compliance with the terms of the Supply Contract as described above, the Default Notice and the 90 (ninety) day cure period referred to therein remain valid and effective.
Forward-Looking Statements
This Current Report contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, but are not limited to, statements regarding any termination of the Supply Contract; and other statements containing the words and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions. Such forward-looking statements represent management\’s current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of the Company’s common stock or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include, but are not limited to: risks related to our ongoing relationship with Inox; and the important factors discussed under the caption “Risk Factors” in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, 2020, and our other reports filed with the SEC. These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management’s estimates as of the date of this Current Report. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Current Report.
About American Superconductor Corporation (NASDAQ:AMSC)
American Superconductor Corporation (AMSC) is a provider of megawatt-scale solutions. The Company operates through two segments: Wind and Grid. Through the Company’s Windtec Solutions brand, the Wind business segment enables manufacturers to field wind turbines. Through the Company’s Gridtec Solutions, the Grid business segment enables electric utilities and renewable energy project developers to connect, transmit and distribute power. AMSC supplies power electronics and control systems, licenses its engineered wind turbine designs and provides customer support services to wind turbine manufacturers. The Company provides a range of power electronics and software-based control systems. AMSC provides transmission planning services that enable it to identify power grid congestion and other risks. The Company also sells grid interconnection solutions for wind farms and solar power plants, power quality systems, and transmission and distribution cable systems.
