Hoku Materials Inc. has entered into a change order agreement under its cost-plus-incentive construction contract with JH Kelly LLC to confirm the plan for JH Kelly to complete construction of Hoku's planned polysilicon production plant, which will produce 4,000 metric tons per year.
In July, Hoku initiated a temporary slowdown of construction and procurement activities to preserve cash while Hoku sought to raise additional capital. JH Kelly subsequently filed a lien claiming past-due accounts payable in the amount of approximately $12 million.
Under the terms of the change order, JH Kelly agreed that it would resume construction activities upon receipt of notice from Hoku and Hoku's payment of $5 million of the past-due amount. In the meantime, JH Kelly agreed to forbear from foreclosing on its approximately $12 million lien until after Dec. 1, 2009, and if Hoku makes the $5 million prepayment by such date, Hoku will have until Jan. 14, 2010, to pay the balance of the $12 million that is past due.
JH Kelly also agreed to waive certain interest and other fees and charges that may be incurred as a result of the past-due amounts.
SOURCE: Hoku Materials Inc.