Hoku Materials explores debt, equity, sale options; slows down work at Pocatello polysilicon plant

Troubled polysilicon startup Hoku Materials is exploring debt and equity financing alternatives with its financial and strategic investors and has also retained Deutsche Bank as an adviser to seek a possible sale. The company, a wholly owned subsidiary of Hoku Scientific, has also ordered the temporary slowdown of construction and procurement activity at the polysilicon production facility under development in Pocatello, ID, to preserve cash and value during its financial investigations, although the company says it has no plan to lay off staff.

"While we would prefer to progress faster in Pocatello, we remain very encouraged by the strong interest in our project among potential financiers, and by the continued commitment of our vendors and customers, as seen in recent amendments," said Dustin Shindo, chairman/CEO of Hoku Scientific. "Despite this temporary slowdown, we remain absolutely confident that this plant will be completed and that we can meet our customer commitments."

"We are caught in the same perfect storm that many other companies are facing: The credit crunch, a general economic downturn, pressure on polysilicon and PV pricing, and a global decline in investment capital," continued Shindo. "Despite these challenges, we've made great progress in construction, and we remain well-positioned to complete and operate our plant. Further, we have no senior bank debt on the project, which gives us flexibility in structuring our future plant financing."

Mason Evans, CEO of J.H. Kelly, Hoku Materials' general contractor, said that this type of shutdown "is fairly common on projects of this scale and complexity. They've gotten a few tough breaks with the market and general economic conditions, but having worked closely with Hoku Materials since they broke ground in 2007, we remain very confident that they will resolve the financing challenges and get us back to work quickly."

"We look forward to completing this facility for them," he continued. "In the meantime, we are maintaining a full-time staff at the Pocatello site to ensure our ability to quickly ramp back up."

The difficulties at Hoku Materials have no impact on the fortunes of the parent company's other solar subsidiary, Hawaii-based Hoku Solar, which focuses on turnkey integration of PV power systems, according to Shindo.