Hoku Scientific and SANYO Enter Major Polysilicon Supply Contract
Source: Hoku Scientific Press release
http://www.shareholder.hokuscientific.com/ReleaseDetail.cfm?ReleaseID=226142
KAPOLEI, HI, Jan 18, 2007 (MARKET WIRE via COMTEX News Network) — Hoku Materials, a division of Hoku Scientific, Inc. (NASDAQ: HOKU) established to manufacture polysilicon for the solar market, today announced the signing of a definitive contract with Sanyo Electric Company, Ltd., for the sale and delivery of polysilicon to SANYO over a seven-year period beginning in January 2009. Under the contract, up to approximately $370 million may be payable to Hoku during the seven-year period, subject to the achievement of milestones, the acceptance of product deliveries and other conditions. The contract provides for the delivery of predetermined volumes of polysilicon each year at set prices from January 2009 through December 2015. The contract also provides for an initial direct deposit of $2 million to Hoku upon signing and requires that SANYO place approximately 30% of the total purchase amount in an escrow account with Bank of Hawaii. Under the agreement, the escrowed funds are to be released to Hoku in installments, subject to Hoku’s successful achievement of certain polysilicon quality and production volume milestones and other conditions.
“This is a major step forward in our plan to launch Hoku Materials and execute our polysilicon business strategy,” said Dustin Shindo, Chief Executive Officer of Hoku Scientific. “We are pleased to have established this relationship with SANYO, a global leader in the solar cell and module business.”
Hoku now plans to build a plant capable of producing 2,000 metric tons of polysilicon per year. Hoku estimates that the establishment of this larger facility may require total construction costs of approximately $260 million. In connection with the financing of this construction, Hoku intends to seek debt capital of approximately $130 million. Under the agreement, Hoku and SANYO each have the right to terminate the agreement if Hoku is unsuccessful in raising the additional capital required to complete the construction of the polysilicon plant within the next six months. If the agreement is terminated early for this reason, if Hoku is ultimately not successful in building the polysilicon plant, or if Hoku does not meet certain quality and productivity milestones or timely deliver minimum quantities of polysilicon, the agreement provides that the initial direct deposit and the funds being held in escrow will be returned to SANYO.
About Hoku Scientific, Inc.
Hoku Scientific (NASDAQ: HOKU) is a clean energy technologies company that develops and manufactures fuel cell membranes and membrane electrode assemblies for stationary (including residential and back-up power applications) and automotive proton exchange membrane fuel cells. The Company is currently planning to expand its business to manufacture solar modules and polysilicon for the solar market. For more information visit www.hokuscientific.com.