MANHASSET, N.Y. Capacitor supplier Kemet Corp. (Greenville, S.C.) has extended an existing long-term tantalum powder supply agreement with Cabot Corp. (Boston), agreeing to take shipments beyond the end of 2006 through the end of 2009.
Under the extended contract, the companies agreed to modify certain terms of the existing contract that Kemet previously assumed financial liability for. As a result, Kemet expects to recognize a non-cash special credit in the September 2004 quarter that would favorably impact net earnings, the company said.
The amount of the special credit has not yet been determined.
Kemet originally agreed to extend its supply contract with Cabot in December 2002, when the companies settled an eight-month long legal dispute that arose when Cabot sued Kemet for failing to honor its tantalum powder supply contract.
At the time, Kemet argued it had a surplus of tantalum powder and claimed Cabot engaged in unfair trade practices. However, in September 2002 the Massachusetts Superior Court dismissed Kemet's counterclaim and ruled in favor of Cabot.
Three months later, when Kemet agreed to settle its dispute with Cabot by extending the supply contract, the capacitor supplier agreed to pay above market prices for tantalum powder, totaling $42 million.