Solar Gainer: Hoku Scientific
POCATELLO, ID (TheStreet) -- It was a longer-time coming than originally anticipated, but Hoku Scientific finally received the rest of the financing its needs to complete construction of its polysilicon plant in Pocatello, Idaho.
Hoku, the Honolulu-based solar company that has been on a declining share price trend since July 2009, was up 6% on Tuesday morning. Hoku announced late Monday that it received the second installment of a total $50 million loan to finance construction of a plant.
Hoku Scientific, based in Honolulu, said the second tranche of $30 million from China-based Tianwei New Energy Holdings was delayed for two weeks due to the Chinese government approval process. However, analysts who cover Hoku had previously stated the financing for the plant had not been proceeding according to plan.
In December, Tianwei New Energy became the majority owner of Hoku Scientific, with control of 60% of Hoku's outstanding shares. In return, Tianwei canceled $50 million in Hoku debt, and agreed to loan Hoku $50 million.Hoku stock tends to move in a volatile fashion on any news related to the plant, and the plant's potential customers, as there have been questions about the financing and customers sticking around during the period of uncertainty. When Solarfun Power (SOLF) announced in late 2009 that it would stick to its payment schedule with Hoku even amid a delay in the plant's financing, Hoku shares gained 20% in one-day. In the announcement about the second tranche of plant financing, Hoku confirmed receipt of $4 million in prepayments on March 1 from Solarfun. Hoku has previously announced delays in polysilicon shipments to customers based on the plant's timeline for completion. The total proceeds of $54 million from the two agreements will be used to pay down past-due vendor balances and liens, and continue development at the polysilicon plant, Hoku Scientific said. Meanwhile, investors and analysts may still have larger questions about the building of a polysilicon plant at a time of depressed prices for polysilicon on the spot market. -- Reported by Eric Rosenbaum in New York.
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