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Hoku and Suntech Announce Amended Polysilicon Supply Contract
  • Term fixed at 10 years; financing deadline extended to December 31, 2008
  • Suntech to use best efforts to secure TCS for start-up of Hoku plant; Hoku to allocate a portion of resulting polysilicon output to Suntech
  • Hoku right of first refusal to deliver wafers

Pocatello, Idaho and San Francisco – May 12, 2008 – Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, Inc. (NASDAQ: HOKU), established to manufacture and sell polysilicon for the solar market, and Suntech Power Holdings Co., Ltd. (NYSE: STP), one of the world's leading manufacturers of photovoltaic (PV) cells and modules, today announced that they have amended their polysilicon supply contract to confirm the ten-year term of the contract, which was previously subject to a mutual right for either party to unilaterally reduce the term to seven years.  In addition, pursuant to the amendment, Hoku Materials has been granted a right of first refusal to deliver all or any portion of the polysilicon in the form of wafers on commercial terms that are no less favorable to Suntech than it would otherwise be able to obtain.  Total amounts that may be payable to Hoku Materials under the ten-year term of the contract are  approximately $678 million, plus amounts payable for excess shipments that may be delivered in calendar year 2009.

Suntech and Hoku Materials further agreed to extend the date when either party may terminate the supply agreement if Hoku Materials is unable to complete the financing for its polysilicon production plant until December 31, 2008, and to reduce the financing milestone to $75 million, including the $25 million that was already raised by Hoku Scientific's sale of common stock in February 2008.  Prior to the amendment, either Hoku Materials or Suntech had the right to terminate the supply agreement if Hoku Materials was unable to secure an aggregate of $100 million on or before May 31, 2008, to finance the procurement and construction of its planned polysilicon plant in Pocatello, Idaho.

Suntech also agreed to use its best efforts to obtain trichlorosilane, or TCS, in 2008 and 2009 for Hoku Materials's use at its production facility.  Hoku Materials plans to build on-site TCS production facilities as part of its polysilicon plant, which are expected to be complete in 2009; however, until Hoku Materials's TCS plant is complete, TCS from a third party will enable the commencement of production faster than otherwise possible.  If Suntech is able to obtain TCS for Hoku Materials, then Hoku Materials will allocate to Suntech additional polysilicon production output in 2009 that is in excess of Hoku Materials's pre-existing 2009 customer commitments.

“These amendments reflect our mutual commitment to strengthening the long-term relationship between Hoku and Suntech,” said Dustin Shindo, Chairman and Chief Executive Officer of Hoku Scientific.  “Locking-in the term at 10 years gives us greater certainty in planning our long-term operations, while Suntech's commitment to help us obtain TCS in 2008 and 2009 could improve our near-term operating results.  Allowing us a right of first refusal to deliver wafers gives us the flexibility to vertically integrate a downstream process if we decide to pursue that strategy in the future.”

Dr. Zhengrong Shi, Suntech's Chairman and Chief Executive Officer, stated, “Hoku has made tremendous progress over the past year, and we are pleased to strengthen our relationship with them.  Confirming the term at ten years gives Suntech more visibility on long-term polysilicon pricing that will further our goal of achieving grid parity in solar.”

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 .

About Suntech
Suntech Power Holdings Co., Ltd. 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 Solar Design LineTM.  Suntech has sales offices worldwide and is a market share leader in key global solar markets. For more information, please visit http://www.suntech-power.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to Hoku Materials's ability to successfully raise sufficient funds to establish polysilicon manufacturing facilities; its ability to engineer and construct a production plant for polysilicon; its ability to manufacture polysilicon; its cost to procure a polysilicon production facility; Hoku Materials's ability to meet the delivery schedules in its customer contracts in general, and to begin shipping products in 2009, in particular; it's ability to successfully achieve the milestones in its contract with Suntech Power Co., Ltd.; the quality of polysilicon to be manufactured; Hoku Materials's costs to manufacture polysilicon, and its future operating results; Hoku Materials's future strategy of vertically integrating wafer manufacturing, and its ability to successfully deliver wafers to 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 and Suntech Power's filings with the Securities and Exchange Commission.  Except as required by law, each of Hoku Scientific and Suntech Power assume 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 Hoku Scientific:

 

Tel:  808-682-7800
ir@hokusci.com

 

 

 

CONTACTS for Suntech Power Holdings Co., Ltd.

 

In China:
     Rory Macpherson
     Investor Relations Manager
     Suntech Power Holdings Co., Ltd.
     Tel:   +86-510-8531-8922
     Email: rory@suntech-power.com

    In the United States:
     Sanjay M. Hurry
     Vice President
     The Piacente Group, Inc.
     Tel:   +1-212-481-2050
     Email: suntech@tpg-ir.com

 

Source:
Hoku Scientific, Inc.
Suntech Power Holdings Co., Ltd.