Hoku Scientific has detailed its challenging financial condition as it struggles to raise a further US$106 million to fund the estimated $390 million construction budget of its polysilicon plant in Pocatello, Idaho. Executives warned that if the fundraising proved unsuccessful it would put the future of the entire company in jeopardy.
Hoku has been hit by a credit crunch, while its revenue has seen a significant fall in demand for PV systems and a rapidly declining polysilicon process as new capacity come on-stream. The company has had to adjust long-term supply deals and seek new customers that are prepared to provide multi-million dollar deposits so that Hoku can continue to finance plant construction and business operations.
“We have made excellent progress during the past fiscal year and we remain on track to make our first deliveries of polysilicon in accordance with our customer contracts, assuming satisfactory financing is identified to accelerate the current pace of construction,” noted Dustin Shindo, chairman, president, and chief executive officer of Hoku Scientific.
Hoku has also been forced to scale back the original polysilicon plants capabilities, such as trichlorosilane (TCS) production, which will now be supplied by a third party. Even reactor testing and initial small production runs have been pushed out to conserve cash.
The company said that it would continue to seek new funds, which were hoped to come from new long-term customers as well as seek alternative forms of fund raising.
Some of Hoku’s polysilicon supply contracts were to start in the second half of 2009, which may force the company to purchase polysilicon on the spot market to meet obligations.