In an effort to raise $25 million in financing, Hoku Scientific, Inc. (NasdaqGM:HOKU) has sold nearly 3 million shares of its common stock to investors, including $20 million dollars worth to a subsidiary of Suntech Power Holdings Co., Ltd. (NYSE:STP), one of the world’s leading manufacturers of photovoltaic (PV) cells and modules and a customer of Hoku.
The complete agreement is for the placement of 2,893,520 shares of Hoku’s common stock. The financing is expected to close on or before February 29, 2008.
Hoku said it intends to use the net proceeds from this financing for the construction of its planned polysilicon production plant in Pocatello, Idaho, and for general corporate purposes, including working capital.
"This equity financing is a significant step forward to obtain our larger debt financing for the construction and procurement of our planned polysilicon plant in Pocatello, Idaho, as we believe that the proceeds from this offering, plus our other cash commitments to the construction and procurement of the polysilicon plant, will satisfy the Merrill Lynch requirement that we contribute up to $35 million in equity towards the project prior to completing our debt financing," said Dustin Shindo, chairman and CEO of Hoku Scientific. "We are especially pleased that one of our key polysilicon customers, Suntech, has made this investment in our company, as it is a sign of their confidence in our business."
In June 2007, Suntech entered into a supply agreement with Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, to purchase up to $678 million of polysilicon from Hoku Materials over a ten year period, with the first shipment scheduled for delivery in 2009.
Under the supply agreement, Suntech is obligated to pay Hoku Materials up to $47 million in prepayments for products, subject to Hoku’s successful completion of various milestones. Suntech has paid Hoku $2 million of the prepayment, and the $45 million balance is secured by a letter of credit issued to Hoku by ABN Amro NV. Hoku Materials also announced today that it has amended its supply agreement with Suntech to extend the date for Hoku Materials to complete the financing for its planned polysilicon plant to May 31, 2008. This is the only modification to the agreement and aligns the financing deadline in the Suntech agreement with the financing deadline in Hoku’s polysilicon supply contract with Sanyo Electric Co, Ltd. Under the terms of the original agreement and the amendment, Hoku Materials or Suntech may terminate the supply agreement if Hoku Materials has not secured financing for its polysilicon plant by the financing deadline.
About Hoku Scientific, Inc.
Hoku Scientific is a diversified clean energy technologies company with three business units: Hoku Materials, Hoku Solar and Hoku Fuel Cells. Hoku Materials plans to manufacture, market, and sell polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar markets, sells and installs turnkey photovoltaic systems in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells.
About Suntech
Suntech Power Holdings Co., Ltd. is a world leading solar energy company as measured by both production output and capacity of solar cells and modules. Suntech designs, develops, manufactures, and markets a variety of solar products for electric power applications in the residential, commercial, industrial, and public utility sectors. Suntech offers one of the broadest ranges of building integrated photovoltaic (BIPV) products under the MSK brand. For more information, visit http://www.suntech-power.com.
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