Kapolei, Hawaii – February 25, 2008 – Hoku Scientific, Inc. (NASDAQ: HOKU), a materials science company focused on clean energy technologies, today announced it has entered into a securities purchase agreement with certain institutional investors, and a wholly owned subsidiary of Suntech Power Holdings Co., Ltd. (NYSE: STP), one of the world's leading manufacturers of photovoltaic (PV) cells and modules, to raise approximately $25 million through the issuance of 2,893,520 shares of common stock. Suntech's subsidiary has agreed to contribute approximately $20 million of the financing. The financing is expected to close on or before February 29, 2008, subject to the satisfaction of customary closing conditions.
The Company intends to use the net proceeds from this financing for the construction of its planned polysilicon production plant in Pocatello, Idaho, and for general corporate purposes, including working capital.
“This equity financing is a significant step forward to obtain our larger debt financing for the construction and procurement of our planned polysilicon plant in Pocatello, Idaho, as we believe that the proceeds from this offering, plus our other cash commitments to the construction and procurement of the polysilicon plant, will satisfy the Merrill Lynch requirement that we contribute up to $35 million in equity towards the project prior to completing our debt financing,” said Dustin Shindo, chairman and CEO of Hoku Scientific. “We are especially pleased that one of our key polysilicon customers, Suntech, has made this investment in our company, as it is a sign of their confidence in our business.”
In June 2007, Suntech entered into a supply agreement with Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, to purchase up to $678 million of polysilicon from Hoku Materials over a ten year period, with the first shipment scheduled for delivery in 2009. Under the supply agreement, Suntech is obligated to pay Hoku Materials up to $47 million in prepayments for products, subject to Hoku's successful completion of various milestones. Suntech has paid Hoku $2 million of the prepayment, and the $45 million balance is secured by a letter of credit issued to Hoku by ABN Amro NV. Hoku Materials also announced today that it has amended its supply agreement with Suntech to extend the date for Hoku Materials to complete the financing for its planned polysilicon plant to May 31, 2008. This is the only modification to the agreement and aligns the financing deadline in the Suntech agreement with the financing deadline in Hoku's polysilicon supply contract with Sanyo Electric Co, Ltd. Under the terms of the original agreement and the amendment, Hoku Materials or Suntech may terminate the supply agreement if Hoku Materials has not secured financing for its polysilicon plant by the financing deadline.
“We are pleased to strengthen our partnership with Hoku through this investment,” said Dr. Zhengrong Shi, chairman and CEO of Suntech. “Through the long term supply of silicon at prices well below today's spot-market rates, Hoku will play a key role in our plan to produce grid parity solar products. Hoku's polysilicon supply will also enable Suntech to continuously expand its production capacity and deliver the means to generate clean, renewable energy to a growing proportion of the world's population.”
Deutsche Bank Securities Inc. acted as the sole placement agent for the transaction.
The securities offered and sold in the private placement were not registered under the Securities Act of 1933, as amended (the "Act"), or any state securities laws, and may not be offered or sold in the United States absent registration, or an applicable exemption from registration, under the Act and applicable state securities laws.
Under an agreement with the investors, Hoku Scientific is required to file a registration statement with the Securities and Exchange Commission covering the resale of the shares of common stock issued to the investors no later than ten days after the closing and to use best efforts to have the registration statement declared effective as soon as practicable thereafter.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities. There shall not be any sale of these securities in any jurisdiction in which such offering would be unlawful.
About Hoku Scientific, Inc.
Hoku Scientific (NASDAQ: HOKU) is a diversified clean energy technologies company with three business units: Hoku Materials, Hoku Solar and Hoku Fuel Cells. Hoku Materials plans to manufacture, market, and sell polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar markets, sells and installs turnkey photovoltaic systems in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells. For more information visit www.hokuscientific.com.
Suntech Power Holdings Co., Ltd. (NYSE: STP) is a world leading solar energy company as measured by both production output and capacity of solar cells and modules. Suntech is passionate about improving the environment we live in and dedicated to developing advanced solar solutions that enable sustainable development. Suntech designs, develops, manufactures, and markets a variety of high quality, cost effective and environmentally friendly solar products for electric power applications in the residential, commercial, industrial, and public utility sectors. Suntech offers one of the broadest ranges of building integrated photovoltaic (BIPV) products under the MSK brand. Suntech has sales offices worldwide and is a market leader in key global solar markets. For more information, please visit http://www.suntech-power.com.
This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to Hoku Scientific's ability to successfully raise sufficient funds to establish polysilicon manufacturing facilities, including its ability to successfully complete its debt financing and to satisfy the requirements of Merrill Lynch in order to obtain the debt financing; its ability to engineer and construct a production plant for polysilicon; its ability to manufacture polysilicon; its cost to procure a polysilicon production facility; its ability to successfully achieve the milestones in its contract with Wuxi Suntech Power Co., Ltd..; Hoku Scientific's future financial performance; Hoku Scientific's business strategy and plans; and objectives of management for future operations. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause Hoku Scientific's actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in Hoku Scientific's filings with the Securities and Exchange Commission. Except as required by law, Hoku Scientific assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Hoku, Hoku Solar, Hoku Fuel Cells, and the Hoku Scientific logo are trademarks of Hoku Scientific, Inc., and Hoku Materials is the trademark of Hoku Materials, Inc., all rights reserved.
CONTACTS For Suntech:
Investor Relations Manager
Suntech Power Holdings Co., Ltd.
In the United States:
Sanjay M. Hurry
The Piacente Group, Inc.
Hoku Scientific, Inc.