Hoku closes in on Idaho polysilicon plant funding
The isle firm's shares gain on the news
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Hoku Scientific Inc. announced yesterday a key $25 million piece of funding for its planned Idaho polysilicon plant, set to start shipments next year.
The financing, expected to close by the end of this week, comes through the issuance of more than 2.8 million shares of stock to China-based Suntech Power Holdings Co. and other investors.
It allows the Kapolei-based alternative-energy technology developer to meet a $35 million requirement under a nonbinding agreement with Merrill Lynch & Co. to borrow $185 million for the construction and startup of the $400 million plant, Chief Financial Officer Darryl Nakamoto said.
Hoku Chairman Dustin Shindo called the new private placement "a significant step forward."
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Hoku Scientific Inc. said yesterday it will raise $25 million to help pay for construction of its planned Idaho polysilicon plant by issuing more than 2.8 million shares of stock.
The funding, in addition to other cash commitments from its polysilicon clients, will satisfy a requirement under a nonbinding letter of intent with Merrill Lynch & Co. to borrow $185 million for the construction and start-up of the plant, Chief Financial Officer Darryl Nakamoto said.
The company was required to raise an additional $35 million in cash under the agreement, which will expire on May 31 if neither Hoku nor Merrill takes action.
The funding announced yesterday, along with customer prepayments, company contributions and the unfinalized Merrill loan would put the company over the $400 million needed to complete the plant, Nakamoto said.
Yesterday's announcement, made before Nasdaq trading began, sent Hoku's shares up $1.04, or 11 percent, to close at $10.30.
Suntech Power Holdings Co., a photovoltaic cell and module manufacturer based in China, will pay $20 million, with undisclosed institutional investors making up the rest of the agreement for 2,893,520 shares of common stock. The financing is expected to close by Friday.
The Kapolei-based alternative-energy technology developer said in June that it had entered a 10-year polysilicon supply contract with Suntech for $678 million, with $47 million in prepayments subject to Hoku's completion of various milestones. Hoku said yesterday it amended the agreement with Suntech to extend the date for it to complete financing for the plant to May 31. The first shipment of polysilicon, a key component for solar panels, is scheduled for delivery next year.
Hoku is relying on prepayments from Suntech, Germany-based Solar-Fabrik AG, Solarfun Power Hong Kong Ltd., and Japan-based Sanyo Electric Co. Ltd. to finance the plant, which is expected to bring in up to $1.6 billion in revenue in 10 years from the contracts.
"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," Dustin Shindo, chairman and CEO of Hoku Scientific, said in a statement.