FRANKFURT - German Q-Cells will continue its wafer supply contract with China's LDK after the two companies agreed to drop legal action over the agreement, which Q-Cells had declared as ended last month.

Q-Cells -- one of the world's largest makers of solar cells -- and Chinese solar company LDK said on Friday that the contract, under which LDK supplies wafers to Q-Cells from 2009 to 2018, would remain intact.

Q-Cells and LDK Solar have agreed to increase the flexibility of delivery schedule. Flexible pricing based on market levels and Q-Cells' preferred customer status will apply for the entire remainder of the contract term, the companies said in a joint statement.

In November, Q-Cells said it had ended the agreement with its Chinese solar wafer supplier, LDK Solar, saying LDK had not fulfilled significant contractual obligations.

Q-Cells had made a prepayment of $244.5 million shortly after it signed the contract with LDK in late 2007, when wafer prices were much higher. Over the past years, however, prices for solar components have plummeted by up to 50 percent, hitting solar companies around the globe.

In Friday's statement, Q-Cells said it would no longer claim the prepayment, which was secured by a bank guarantee.

(Reporting by Christoph Steitz)