Hoku Materials Inc. has amended its polysilicon supply agreement with Sanyo Electric Co. Ltd. to extend the date for Hoku to complete the financing for its planned polysilicon plant. Under the terms of the amendment, Hoku or Sanyo may terminate the supply agreement if Hoku has not secured financing for its polysilicon plant by Feb. 15.
In December, Hoku announced that it had signed a non-binding term sheet with Merrill Lynch Pierce Fenner & Smith Inc. to borrow up to approximately $185 million for the construction, procurement and start-up of its planned polysilicon production plant in Pocatello, Idaho.
Hoku says it has also exercised its option to reduce the volume allocation and increase the price in its polysilicon supply agreement with Global Expertise Wafer Division Ltd. (GEWD), a wholly owned subsidiary of Solar-Fabrik AG.
GEWD had already paid Hoku $2 million in cash and provided a $25 million standby letter of credit in prepayment of future deliveries when the supply agreement was signed in June 2007. Under the terms of the supply agreement, Hoku had the option to reduce the amount of polysilicon to be shipped to GEWD and to increase the price of the products if GEWD did not provide an additional $26 million standby letter of credit by Sept. 30, 2007.
As GEWD did not provide the additional letter of credit within the agreed deadline, Hoku has chosen to exercise its option and to continue its cooperation with GEWD on the basis of the first letter of credit as provided in the agreement.
