Hoku Scientific (HOKU) Revises Agreement With Suntech (STP), Announces $28 Million Loan From China Bank

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04:56:40 pm on June 30, 2010

It’s a busy afternoon for Hoku Scientific (HOKU).  The company announced a revised agreement with Suntech Power (STP) which excludes Suntech from having to prepay $30 million for future shipments of polysilicon, but potentially allows Hoku to keep the $2 million already paid which will be credited to future shipments.  The terms have also been shorted to one year and Hoku isn’t obligated to ship polysilicon until next June.

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That’s a big hit to Hoku in prepayment revenues, but it looks like China Construction Bank will make up the difference so that the company can continue getting its Idaho plant up and running again.  The bank will provide Hoku with a $28.3 million credit line which it has 90 days to use and must be repaid by June 14, 2012

Scott Paul, president & CEO of Hoku Corporation, said, “As we continue to advance construction of our facility and look ahead to the planned ramp up to the commercial production of polysilicon, we are very pleased to have the strong backing of both Tianwei and China Construction Bank. These funds substantially replace the prepayments formerly expected from Suntech Power, and are expected to be sufficient to commence initial commercial production runs at our polysilicon facility. ”

Shares of Hoku are down about 3% in after hours trading, but maintain a bullish uptrend over the last four months and continues to find support at the 50 day moving average.  It appears traders believe the worst is over for Hoku.

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