Hoku receives loan installment for silicon plant

POCATELLO, Idaho (AP) — Hoku Scientific Inc. said Monday that a subsidiary received the second installment of a total $50 million loan to finance construction of a plant in Pocatello that will manufacture polysilicon for the solar energy industry.

Hoku Scientific, based in Honolulu, said its wholly owned Hoku Materials Inc. unit received the second tranche of $30 million from China-based Tianwei New Energy Holdings Co. Hoku also confirmed receipt of $4 million in prepayments on March 1 from Solarfun Power Hong Kong Ltd. under a polysilicon sales agreement with Hoku.

The total proceeds of $54 million from the two agreements will be used to pay down past-due vendor balances and liens, and continue development at the polysilicon plant, Hoku Scientific said.

Hoku had expected Tianwei to provide the second tranche of $30 million no later than Feb. 22 — a timeline that could have allowed Hoku to conduct a reactor demonstration at the plant this month. Hoku said the payment was delayed two weeks so that the Chinese government could approve the foreign currency transaction. Hoku now expects to complete the demonstration next month, with shipments expected to begin later this year.

In December, Tianwei New Energy became the majority owner of Hoku Scientific, with control of 60 percent of Hoku's outstanding shares. In return, Tianwei canceled $50 million in Hoku debt, and agreed to loan Hoku $50 million. Tianwei makes silicon wafers and photovoltaic cells and systems.

Last July, Hoku slowed construction at the plant to preserve cash while it sought to raise capital, and the builder, JH Kelly, had filed a lien against it for $12 million in past due payments.
Hoku announced the receipt of the second installment of the loan after its shares slipped 4 cents to close at $2.30.

March 8, 2010