TWO companies of the Lopez-led conglomerate First Philippine Holdings Corp. (FPH) have won an international arbitration case involving compensation of about P3 billion in damages against a South Korean firm that failed to deliver on a solar wafer-slicing deal.
In a disclosure to the Philippine Stock Exchange, FPH said that its unit First PV Ventures Corp. and its joint venture firm First Philec Nexolon Corp. (FPNC) won an arbitration case they filed in 2012 with the International Chamber of Commerce (ICC) against South Korea-based Nexolon Co. Ltd.
FPNC is a joint venture company established by First PV (70 percent) and Nexolon (30 percent) to slice silicon wafers in the country for the South Korean company. The business, however, never took off.
All that the partnership can show is a new but idle FPNC plant that was set up in the First Philippine Industrial Park in Tanauan, Batangas in 2011.
Under the joint venture agreement between First PV and Nexolon, a put option arises as a consequence of a termination of the agreement and is available to the non-breaching party.
A 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.
In 2012, FPNC brought the case to the ICC for arbitration, citing the need to enforce its rights under the agreement. First PV joined the arbitration as a party to protect its rights under the joint venture with Nexolon.
In deciding the case, the ICC ordered Nexolon to pay $24.8 million (approximately P1.1 billion) in damages and pre-award interest to FPNC and pay another P2 billion “for the put option price in consideration for First PV’s shares in FPNC.”
“Nexolon has until November 2 to pay these amounts and if it does not do so by this date, it will be liable for a post-award interest of 8 percent per annum,” FPH said.
Both FPNC and First PV are looking at options to collect payment as Nexolon is currently under corporate rehabilitation proceedings in South Korea.