Marketwire reports that Hoku has entered into a second contract with Tianwei New Energy Wafer Co, bringing it one step closer to funding the polysilicon plant it is constructing in Idaho. Hoku has also increased the capacity of the proposed plant, from 3,500 metric tons of polysilicon to 4,000.
Under the new contract with Tianwei, Tianwei will pay Hoku Energy an additional $227 million, more or less, for predetermined amounts of polysilicon, to be delivered at set intervals over the next 10 years. Together with the original contract, that means that Tianwei has approximately $511 million in orders from Hoku over the next 10 years.
According to Marketwire, additional terms of the contract are as follows:
The take-or-pay contract provides for the delivery of predetermined volumes of polysilicon each year, with the first shipment in the second quarter of 2010 and the remainder over a ten-year period at set prices that will decline throughout the term of the agreement. The contract also provides for a deposit of $10 million to Hoku in September 2008, and requires that Tianwei make additional deposits for products in the amount of $12 million by December 15, 2008, $12 million by April 30, 2009, and $2 million upon first shipment. Under the agreement, Hoku will grant to Tianwei a security interest in all of its tangible and intangible assets related to its polysilicon business to secure Hoku’s obligation to repay $36 million to Tianwei as a credit against product shipments over time.
So far, Hoku has combined prepayment commitments of $306 million from all of its customers, and has committed $47 million of its own money, so the new plant has secured a total of $353 million in committed funding.