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AMSC will get $57.5 million from Sinovel; finds closure in resolution

AMSC’s former largest customer, China’s Sinovel Wind Group Co. Ltd. (Sinovel) has agreed to pay it $57.5 million in two installments to settle a dispute over stealing its technology. It was also fined $1.5 million by a federal judge on July 9, concluding a key stage in a long-fought case of IT theft that stems back as far as 2011.

The story of what happened to AMSC, formerly known as American Superconductor Inc., is staggering in scope. While it made high-temp superconductor wire, AMSC’s biggest focus was its proprietary technology to control wind turbines. The company had a $16 million profit for fiscal 2010, at which time it had some 700 employees and was on an international growth path. In early 2011, its stock traded as high as $260 a share, but later that year, Sinovel, its largest customer, refused to accept a shipment. It was later shown at trial that Sinovel, through an AMSC employee, had stolen its technology. The subsequent losses were later said to be more than $800 million.

The company cut its workforce in 2011 by 150 people, a 30% reduction, with further cuts made over the following years. A lengthy and expensive international legal battle was fought by AMSC in Chinese courts, and in 2013, the Justice Department announced charges against Sinovel. In the last 12 months, AMSC’s stock price dropped to below $3 a share, but bolstered by sales of its collective energy solutions products—and a key court victory on Jan. 24, 2018, where a U.S. jury found in favor of AMSC—and hopes of a significant settlement by Sinovel, it had risen to as much as $8 a share, only to fall under $6 a share when news of the settlement and the judge’s sentence was made on July 9.

AMSC President and CEO Daniel P. McGahn, who following the Jan. 24 jury finding declared that the outcome was “a victory for the rule of law,” said that the resolution it had reached with Sinovel prior to the sentencing was an important step. “We valued the past cooperation between Sinovel and AMSC which was heralded as the example of Sino-U.S. cooperation in the new energy area. Through Sinovel’s and AMSC’s joint efforts, we have signed a settlement agreement to resolve the previous disputes in a constructive manner that we believe will enable us to move on with our respective businesses. This closes a challenging chapter for AMSC.”.

Read 1873 times Last modified on July 27, 2018