Hoku Scientific Financing Brings Hope & Plans Closer to Fruition (HOKU)
After the close of trading on Wednesday, Hoku Scientific, Inc. (NASDAQ: HOKU) announced that it signed a non-binding term sheet with Merrill Lynch (NYSE:MER) to borrow up to roughly $185 million for the construction, procurement and start-up of its planned polysilicon production plant in Pocatello, Idaho.
The closing of the loan and the availability of the funds is subject to several conditions:
- completion by Merrill Lynch of its due diligence,
- negotiation and execution of definitive loan and collateral documents,
- and the receipt of third-party consents.
Hoku Scientific will also be required to provide its Hoku Materials unit with approximately $35 million in cash for use in the construction of the planned polysilicon plant. To meet this and other capital requirements, Hoku Scientific will be required to secure additional financing.
The Idaho facility is expected to produce approximately 2,500 metric tons of polysilicon per year, and the first customer shipments are planned for the beginning of 2009. Hoku just recently announced its Phase II of its planned polysilicon facilities to increase its capacity beyond 2,500 metric tons per year.
This non-binding term sheet will expire on the earlier of the termination of negotiations between the parties or May 31, 2008 and there may be additional material closing conditions required. So this is not a 100% done and completed deal, but if all goes well the company has gotten more of its hopes and plans that much closer to fruition.
Jon C. Ogg
December 6, 2007
Jon Ogg can be reached at firstname.lastname@example.org; he does not own securities in the companies he covers.