Hoku Corp., a solar energy products and services company, says it is restructuring the company and laying off employees as it works through challenging financial times.
In a business update, the company confirms that it substantially reduced construction activities at its Pocotello, Idaho, polysilicon production facility owned by subsidiary Hoku Materials in December 2011. By April 2012, all construction contractors had stopped work. The facility is not yet in commercial operation.
Due to the delinquency of unpaid construction obligations, liens have been filed against the Hoku Materials polysilicon plant, and some lien holders have begun foreclosure proceedings in the Idaho courts.
The company has received an additional loan from China Merchant's Bank, New York Branch, which is secured by a cash collateralized letter of credit drawn by Hoku's parent company, Tianwei New Energy Holdings Co. Ltd. However, the proceeds of the loan are ‘insufficient to pay down current liabilities, resume construction or start commercial operations,’ says Scott Paul, CEO of Hoku Corp.
Consequently, the company says it has terminated approximately 100 of its Pocatello plant employees, ceased business activities and terminated all staff at Tianwei Solar USA Inc., the wholly owned subsidiary formed to market and sell Tianwei's modules in North America.
Subsidiary Hoku Solar, which markets and installs turnkey photovoltaic systems and provides related services, operates as a standalone business and is expected to avoid restructuring, Paul says.