Idaho Statesman: Financial woes hit Hoku plant in Pocatello
POCATELLO, ID--(Marketwire -05/22/12)- Hoku Corporation (HOKU) (the "Company"), a solar energy products and services company, today provided an update on its business.
The Company confirmed that it had substantially reduced construction activities at the polysilicon production facility of Hoku Materials, its subsidiary, in December 2011, and by April 2012, all construction contractors had stopped work. The facility is not yet in commercial operation.
The Company announced that as of March 31, 2012, its preliminary estimates of cash, other current assets and current liabilities was approximately $7.7 million, $6.7 million, and $278.8 million, respectively. The current liabilities include approximately $74.4 million of accounts payable at Hoku Materials. Due to the delinquency of unpaid construction obligations, liens have been filed against the Hoku Materials polysilicon plant, and some lienholders have begun foreclosure proceedings in the Idaho courts.
The Company announced that it received an additional loan from China Merchant's Bank, New York Branch, which is secured by a cash collateralized letter of credit drawn by Hoku's parent company, Tianwei New Energy Holdings Co., Ltd. ("Tianwei").
"The proceeds of the loan are insufficient to pay down current liabilities, resume construction, or start commercial operations," said Scott Paul, CEO of Hoku Corporation. "The loan proceeds will be used to fund working capital requirements while we plan for a restructuring of our liabilities, and the liabilities of our subsidiary Hoku Materials, Inc. We have retained Imperial Capital as our financial advisor to assist with this restructuring effort."
In the meantime, Hoku Materials reported that it has terminated approximately 100 of its Pocatello plant employees. This reduction in force is necessary to conserve cash while the Company pursues restructuring alternatives.
In addition, the Company reported that it has ceased business activities and terminated all staff at Tianwei Solar USA, Inc., the wholly owned subsidiary formed to market and sell Tianwei's modules in North America, and that Hoku Solar would continue to seek opportunities to sell Tianwei's modules in this market.
Commenting on Hoku Solar, the Company's wholly owned subsidiary that markets and installs turnkey photovoltaic systems and provides related services, Paul said, "We do not intend to restructure Hoku Solar, as it is operated as a standalone business, which supports its operating cash requirements from sales revenue. Hoku Solar is actively working on several of the largest utility-scale photovoltaic projects in the State of Hawaii, and fully intends to continue delivering its investment-grade PV™ solutions to its current customers, while continuing sales and marketing activities."
Hoku Solar Claims it Can Survive Collapse of Parent Company
(Remember, your Act 221 Tax Credits paid for this mess.)
News Release from Hoku Solar May 22, 2012
Hoku Solar, a wholly-owned subsidiary of Hoku Corporation and one of Hawaii's most experienced solar companies, addressed the announcement of potential restructuring made by its parent company today, noting that it intended to continue normal business operations as a provider of investment-grade PV™ solutions to the Hawaii market.
"These are uncommonly difficult times in solar manufacturing," said Jerrod Schreck, president of Hoku Solar. "However, opportunities continue to exist for experienced project developers and system integrators like Hoku Solar, and we plan to continue providing these services to our commercial, institutional and utility customers in Hawaii."
Hoku Solar had reported a 500 percent increase in revenues for the quarter ending on December 31, 2011, as compared to the same quarter in the previous year. In aggregate during its last fiscal year, the Company experienced year-over-year growth in excess of 200 percent.
"Hoku Solar is a stand-alone business unit that operates on its own sales revenue," said Scott Paul, CEO of Hoku Corporation. "As such, Hoku Solar is not planned for inclusion in the potential Hoku Corporation and Hoku Materials restructuring announced earlier today."
(Just wait ‘til the creditors weigh in.)
Hoku Solar's current portfolio includes a number of utility-scale PV projects, including the design and construction of one of Hawaii's largest solar energy facilities to date - a seven-megawatt solar farm on the island of Kauai. The Company is also currently constructing a 1.2 megawatt solar array at Pearl City Peninsula on Oahu, in addition to other commercial and industrial rooftop PV systems throughout the islands. The Pearl City Peninsula project is expected to be Oahu's second operational utility-scale solar facility, following Hoku Solar's delivery of the island's first grid-tied solar farm at the Kapolei Sustainable Energy Park last December.
Utility-scale PV projects combine elements of real estate development, structured finance, high-tech construction, and renewable energy asset management. Together with its project partners, Hoku Solar is one of the few firms in Hawaii that has succeeded in placing large projects like this into service.
"Hoku Solar has had the privilege of designing and constructing some of the largest and most complex solar energy facilities in Hawaii," said Schreck. "We remain sharply focused on delivering investment-grade commercial and utility-scale solar energy facilities, and we are grateful to our valued customers, vendors and partners for their strong, continuing support and aloha."