News Article
Financial Plans Outlined
Hoku provides update to polysilicon production strategy
Hoku Materials has announced it is in discussions with several strategic and financial investors regarding debt and equity financing. While the Company reported that the various sources of funding look promising, it expects it will need a few months to work through these options. Hoku also reported that, in addition to seeking debt and equity alternatives, it had retained Deutsche Bank Securities, Inc. as its financial advisor to seek a possible sale of the Company.
To preserve cash and value while pursuing these opportunities, Hoku Materials will begin issuing orders for a temporary slowdown of construction and procurement activity at the polysilicon production facility currently under development in Pocatello, Idaho. The Company had previously announced a strategic delay in constructing the TCS portion of the plant, and now plans to extend the slowdown to temporarily include the other areas as well.
"While we would prefer to progress faster in Pocatello, we remain very encouraged by the strong interest in our project among potential financiers, and by the continued commitment of our vendors and customers, as seen in recent amendments," said Dustin Shindo, chairman and chief executive officer of Hoku Scientific, Inc. "Despite this temporary slowdown, we remain absolutely confident that this plant will be completed and that we can meet our customer commitments. To that end, we have no plans to lay off any of our staff, including the first group of plant operators that we hired in Pocatello in June."
"We are caught in the same perfect storm that many other companies are facing: The credit crunch, a general economic downturn, pressure on polysilicon and PV pricing, and a global decline in investment capital," said Mr. Shindo. "Despite these challenges, we've made great progress in construction and we remain well
positioned to complete and operate our plant. Further, we have no senior bank debt on the project, which gives us flexibility in structuring our future plant financing."
"This type of curtailment is fairly common on projects of this scale and complexity," said Mason Evans, CEO of J.H. Kelly, Hoku Materials' General Contractor. "They've gotten a few tough breaks with the market and general economic conditions, but having worked closely with Hoku Materials since they broke ground in 2007, we remain very confident that they will resolve the financing challenges and get us back to work quickly. We look forward to completing this facility for them. In the meantime, we are maintaining a full time staff at the Pocatello site to ensure our ability to quickly ramp back up."
Commenting on Hoku Solar, the Company's Hawaii-based subsidiary focused on turnkey integration of photovoltaic (PV) power systems, Mr. Shindo noted, "The challenges in funding the polysilicon plant and the temporary construction slowdown applies exclusively to Hoku Materials. The companies are both wholly-owned subsidiaries of Hoku Scientific, but each operates completely independently of the other. We remain very excited about the opportunity to continue expanding Hoku Solar's PV installation business and continue to actively install systems in Hawaii."
To preserve cash and value while pursuing these opportunities, Hoku Materials will begin issuing orders for a temporary slowdown of construction and procurement activity at the polysilicon production facility currently under development in Pocatello, Idaho. The Company had previously announced a strategic delay in constructing the TCS portion of the plant, and now plans to extend the slowdown to temporarily include the other areas as well.
"While we would prefer to progress faster in Pocatello, we remain very encouraged by the strong interest in our project among potential financiers, and by the continued commitment of our vendors and customers, as seen in recent amendments," said Dustin Shindo, chairman and chief executive officer of Hoku Scientific, Inc. "Despite this temporary slowdown, we remain absolutely confident that this plant will be completed and that we can meet our customer commitments. To that end, we have no plans to lay off any of our staff, including the first group of plant operators that we hired in Pocatello in June."
"We are caught in the same perfect storm that many other companies are facing: The credit crunch, a general economic downturn, pressure on polysilicon and PV pricing, and a global decline in investment capital," said Mr. Shindo. "Despite these challenges, we've made great progress in construction and we remain well
positioned to complete and operate our plant. Further, we have no senior bank debt on the project, which gives us flexibility in structuring our future plant financing."
"This type of curtailment is fairly common on projects of this scale and complexity," said Mason Evans, CEO of J.H. Kelly, Hoku Materials' General Contractor. "They've gotten a few tough breaks with the market and general economic conditions, but having worked closely with Hoku Materials since they broke ground in 2007, we remain very confident that they will resolve the financing challenges and get us back to work quickly. We look forward to completing this facility for them. In the meantime, we are maintaining a full time staff at the Pocatello site to ensure our ability to quickly ramp back up."
Commenting on Hoku Solar, the Company's Hawaii-based subsidiary focused on turnkey integration of photovoltaic (PV) power systems, Mr. Shindo noted, "The challenges in funding the polysilicon plant and the temporary construction slowdown applies exclusively to Hoku Materials. The companies are both wholly-owned subsidiaries of Hoku Scientific, but each operates completely independently of the other. We remain very excited about the opportunity to continue expanding Hoku Solar's PV installation business and continue to actively install systems in Hawaii."
