Citing ongoing difficulties in raising capital to bridge a $106 million financing gap for its polysilicon plant in Pocatello, Hawaii- based solar energy firm Hoku Scientific announced on July 10 that has amended a supply agreement with its largest customer, China- based Suntech Power Holdings, and is seeking a buyer for the company.

Hoku CEO Dustin Shindo stated in a news release:

"Given our current market capitalization, it is unlikely that we will be able to secure the capital we need without selling a majority of our stock or assets. That being the case, we are seeking a strategic buyer for the company, while simultaneously seeking debt and equity financing alternatives."

Hoku has been trying to raise capital for the plant since 2006, and has already secured approximately $243 million in customer prepayments, plus an additional $41 million in equity. That still leaves the company about $106 million short for the completion of its $390 million, 4,000 metric tons per year polysilicon plant.

The supply agreement has been amended to delay the deadlines for Hoku to achieve three polysilicon plan operation milestones in exchange for lowering Suntech's aggregate prepayment obligation.

Hoku must complete a polysilicon reactor test demonstration by December 2009; ship the first monthly quantity of polysilicon by March 2010; or achieve a tricholorsilane (TCS) plant operation milestone by Dec. 31, 2010.

If Hoku is unable to meet the milestones, Suntech reserves the right to terminate the contract. According to a news release from Hoku, the "effectiveness of the amendment is contingent on Hoku entering into a definitive agreement that would result in the change of control of Hoku, and the closing of any such transaction by March 31, 2010."

In the release, Hoku confirmed that it has retained Deutsche Bank Securities Inc. as its financial adviser to seek a possible sale of the company.

In its fiscal 2009 earnings, released June 11, Hoku raised the possibility that without additional financing the company may not have sufficient funds to complete the Pocatello plant or continue as a going concern.

A message left with CEO Dustin Shindo was not immediately returned.

Credit: IBR Staff

(Copyright 2009 Dolan Media Newswires)

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