REC Silicon Annual Report 2019

79 Notes to the consolidated financial statements, REC Silicon Group REC Silicon Annual Report 2019 EVENTS AFTER THE REPORTING PERIOD PHASE I TRADE AGREEMENT BETWEEN THE US AND CHINA On January 15, 2020 the Phase I economic and trade agreement was signed by the Government of the United States and the Government of China. This agreement prioritizes polysilicon and contains commitments for China to purchase goods manufactured in the United States during 2020 and 2021. REC Silicon has been advised by US government officials that specific commitments for China to purchase specific quantities of solar grade polysilicon manufactured in the United States are contained in non-public annexes to the agreement. REC Silicon has received indication from these US government officials that Chinese markets for solar grade polysilicon are open to US solar grade polysilicon without tariffs and that these commitments override the extension of tariffs on US made polysilicon announced by the Ministry of Commerce of the People’s Republic of China on January 19, 2020. The Company is evaluating the potential impacts of the Phase I trade agreement. The timing or outcome of any decision to resume operations at the FBR facility in Moses Lake remains uncertain. The Company has not considered the potential impacts of this agreement in calculating estimates used to prepare these financial statements. For example, this agreement has the potential to accelerate the restart of the FBR facility inMoses Lake, Washington compared to estimates used to determine the value in use for impairment testing described in note 3 above. COVID-19 OUTBREAK (NOVEL CORONAVIRUS) Recent world events indicate that the spread of COVID-19 (novel coronavirus) is having an adverse impact on the economy and is disrupting global supply chains. Specifically, there have been reports of underutilization of production capacity in industry segments served by REC Silicon. REC Silicon anticipates that its customers will experience a disruption of operations caused by the response to and the impact of the COVID-19 outbreak. In addition, REC Silicon has restricted travel to the Asia-Pacific region to protect its employees and to prevent further spread of the virus. The COVID-19 outbreak has the potential to increase market risks, liquidity risks, and credit risk faced by the Company. The impacts of the COVID-19 outbreak on REC Silicon’s financial performance are dependent upon the extent and duration of the outbreak. Company management will continue to monitor the situation and take appropriate action as additional developments occur. 33