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Hoku and SANYO enter major polysilicon supply contract

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Hoku Materials, a division of Hoku Scientific, Inc. has announced the signing of a definitive contract with Sanyo Electric Company, Ltd., for the sale and delivery of polysilicon to SANYO over a seven-year period beginning in January 2009.
Hoku Materials, a division of Hoku Scientific, Inc. has announced the signing of a definitive contract with Sanyo Electric Company, Ltd., for the sale and delivery of polysilicon to SANYO over a seven-year period beginning in January 2009. Under the contract, up to approximately $370 million may be payable to Hoku during the seven-year period, subject to the achievement of milestones, the acceptance of product deliveries and other conditions. The contract provides for the delivery of predetermined volumes of polysilicon each year at set prices from January 2009 through December 2015. "This is a major step forward in our plan to launch Hoku Materials and execute our polysilicon business strategy," said Dustin Shindo, Chief Executive Officer of Hoku Scientific. "We are pleased to have established this relationship with SANYO."Hoku now plans to build a plant capable of producing 2,000 metric tons of polysilicon per year. Hoku estimates that the establishment of this larger facility may require total construction costs of approximately $260 million. In connection with the financing of this construction, Hoku intends to seek debt capital of approximately $130 million. Under the agreement, Hoku and SANYO each have the right to terminate the agreement if Hoku is unsuccessful in raising the additional capital required to complete the construction of the polysilicon plant within the next six months. If the agreement is terminated early for this reason, if Hoku is ultimately not successful in building the polysilicon plant, or if Hoku does not meet certain quality and productivity milestones or timely delivery of minimum quantities of polysilicon, the agreement provides that initial funds will be returned to SANYO.
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