Arbitration court rules against AMSC

AMSC chief executive Dan McGahn, at right

AMSC chief executive Dan McGahn, at right

US wind technology company AMSC will take a $10.5m charge in its second fiscal quarter after an international arbitration court found that the company’s Austrian subsidiary breached a 2008 license agreement with Ghodawat Energy in India.

The Arbitration Tribunal for the ICC International Court of Arbitration (ICC Court) awarded Ghodawat, a former AMSC wind turbine technology licensee, $11m in damages and costs, including interest.

In a statement, AMSC says it was notified Monday by the ICC Court of its ruling and is “exploring its options.”

“The Company believes that it has sufficient available liquidity to satisfy the award, if required, and to fund its operations for at least the next twelve months,” the statement says.

AMSC fell 7.5% to $1.61 per share on the news in mid-morning trading in New York.

As a result of the charge, AMSC expects to adjust its net loss guidance to be “less than” $26m, or 33 cents per share, for the second fiscal quarter ending 30 September.

Ghodawat alleged that AMSC Austria breached an agreement dated 19 March 2008 by which it granted a license to manufacture, use, sell, market, erect, commission, and maintain certain wind turbines that allowed the Indian firm to use its technical information and design.

Ghodawat lodged a Request for Arbitration with the ICC Court on 12 May 2011. It sought €18m ($24m. AMSC Austria also submitted counterclaims under the license agreement against Ghodawat for €6m.

Money-losing AMSC has struggled to regain momentum since 2011 when it broke ties with Sinovel, formerly its largest customer and now bitter adversary in a protracted and slow-moving legal battle in both China and the US.

A US grand jury in July 2013 charged Sinovel, two of its executives and a former AMSC subsidiary employee in Austria with stealing trade secrets from the Massachusetts-based company.

AMSC is pursuing Sinovel for alleged intellectual property theft and breach of contract in a $1.2bn action centering on power-electronics software code, part of the electrical control system used in wind turbines, plus payment for contracted deliveries.

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