Hoku (HOKU) And Solarfun (SOLF) Renegotiate Contracts

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08:42:53 am on March 31, 2009

Hoku Materials, Inc. and Solarfun just announced a renegotiation of the polysilicon supply contract between the two companies. Solarfun was previously obligated to pay Hoku $18 million by March 31st, but the agreement has been changed so that Solarfun can pay in installments according to the following schedule: 1) $5 million paid on March 30; 2) $8 million in July $2009; 3) $5 million to paid in installments of $1 million each during August and September 2009; 4) $3 million in October of 2009. Solarfun’s $5 million payment due March 31, 2010 will be paid in January of 2010 instead.

In return for Hoku’s willingness to change the payment due dates, Solarfun has agreed to allow Hoku more leeway in its shipping dates. The deadline for polysilicon shipment was September of 2009, but it has been extended to March of 2010. The agreement can be terminated if Hoku doesn’t start shipping polysilicon to Solarfun by June 2010 or if Solarfun doesn’t pay its payments on time.

Dustin Shindo, chairman and chief executive officer of Hoku Scientific, commented on the negotiations in a company press release:

"Solarfun is an important relationship. We were willing to renegotiate the timing of their near-term prepayments to ensure our mutual long-term success. We still plan to commence customer shipments in the second half of 2009; however, delays in customer payments can impact our plant construction schedule, and we appreciate their flexibility in moving our required delivery dates."

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