Dear reader, please take a moment to absorb the utter and complete failure of this ACT221 tax credit wunderkind. After being held up and touted by every media outlet in Hawai except Hawai`i Free Press, the truth about Hoku and all of its Act 221 scam brethren is finally being revealed for all to see. Don’t expect any media companies to do apologetic and self-critical pieces. They will likely ignore their own complicity in the looting of Hawaii taxpayers.
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PBN: Hoku Corp. gets compliance warning from Nasdaq
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Hoku Corporation form 8-K filed with SEC January 13, 2012: LINK
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On January 12, 2012, Hoku Corporation (the “Company”) received written notice from The Nasdaq Stock Market indicating that, for the last 30 consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share required for continued inclusion on The Nasdaq Global Market under Nasdaq Listing Rule 5450(a)(1). The notification letter states that the Company will be afforded 180 calendar days, or until July 10, 2012, to regain compliance with the minimum bid price requirement. In order to regain compliance, shares of the Company’s common stock must maintain a minimum bid closing price of at least $1.00 per share for a minimum of ten consecutive business days.
NASDAQ’s letter further states that if the Company does not regain compliance with the minimum bid price requirement, it may be eligible for additional time under NASDAQ Marketplace Rule 5810(c)(3)(A)(ii) for an additional 180 day period if it submits, no later than July 10, 2012, an application to transfer its common stock to the NASDAQ Capital Market. The Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards of the NASDAQ Capital Market, with the exception of the minimum bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split if necessary. NASDAQ staff will make a determination of whether it believes the Company will be able to cure this deficiency, or should the Company determine not to submit a transfer application to the NASDAQ Capital Market, NASDAQ will provide written notification to the Company that its common stock will be subject to delisting from the NASDAQ Global Market. At that time, the Company may appeal NASDAQ’s decision to a NASDAQ Hearings Panel.
The Company intends to actively monitor the bid price for its common stock between now and July 10, 2012, and will consider all available options to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement.
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Hoku Corporation form 8-K filed with SEC January 11, 2012: LINK
Item 1.01. Entry into a Material Definitive Agreement
On January 11, 2012, Hoku Corporation (“Hoku”) entered into a Credit Agreement (the “Credit Agreement”) with Industrial and Commercial Bank of China, Limited, New York Branch (the “Lender”). The Credit Agreement provides for one or more term loans (the “Loans”) in an aggregate principal amount not to exceed $10.0 million (the “Maximum Loan Amount”), which must be borrowed by January 19, 2012. The principal amount of the Loans and any unpaid interest thereon must be paid in full by January 11, 2017 or the tenth business day prior to the date on which the standby letter of credit expires or otherwise terminates, whichever is earlier. Funds provided pursuant to the Credit Agreement are for the completion of the construction of the polysilicon production plant currently being constructed by Hoku’s subsidiary, Hoku Materials, Inc., in Pocatello, Idaho.
The Loans will bear interest at a per annum rate equal to the LIBOR Rate (as set forth in the Credit Agreement) for the applicable interest period plus 4.0%. Hoku has also agreed to pay the Lender’s reasonable costs and expenses in connection with the preparation, negotiation and delivery of the Credit Agreement. Hoku may not prepay the Loans, in whole or in part, at any time without the Lender’s prior written consent (such consent to be given in the Lenders’ sole discretion). In addition, the Credit Agreement provides for a prepayment fee ranging from 3% to 1% of the principal amounts prepaid depending upon the timing of such prepayments.
The Credit Agreement includes customary representations, warranties, covenants, acceleration, indemnity, and events of default provisions which may accelerate Hoku’s payment obligations under the Credit Agreement.
The Loans are secured by a standby letter of credit issued by Industrial and Commercial Bank of China Limited, Sichuan Branch, which was procured by Tianwei New Energy Holdings Co., Ltd., Hoku’s parent company (“Tianwei”), in favor of the Lender and which has an aggregate drawable amount of not less than $12.4 million.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Related Arrangements between Hoku and Tianwei
As previously disclosed in Hoku’s periodic reports filed with the Securities and Exchange Commission, Tianwei and Hoku have been discussing what would constitute fair compensation for Tianwei for the financial services it is providing Hoku. Tianwei has and will provide standby letters of credit to secure the Loans in reliance on an understanding with Hoku that Tianwei will receive fair compensation for providing the letters of credit. Hoku and Tianwei are still discussing the amount and type of compensation; however Hoku believes the compensation will be in the form of a common stock warrant.
In addition, on January 11, 2012, in consideration of Tianwei’s procurement of the initial standby letter of credit and its efforts to obtain additional standby letters of credit to secure Loans under the Credit Agreement, Hoku entered into a Reimbursement Agreement with Tianwei obligating it to repay Tianwei for all interest, fees and expenses incurred by Tianwei in connection with the negotiation, execution and performance of the standby letter of credit contemplated by the Credit Agreement.
The foregoing description of the Reimbursement Agreement does not purport to be complete and is qualified in its entirety by reference to the Reimbursement Agreement, a copy of which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above is incorporated by reference into this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
10.1: Credit Agreement, dated January 11, 2012, between Hoku Corporation and Industrial and Commercial Bank of China, Limited, New York Branch.
10.2: Reimbursement Agreement, dated January 11, 2012, between Hoku Corporation and Tianwei New Energy Holdings Co., Ltd.
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Hoku Materials Files Complaint Against Idaho Power to Amend Electric Service Agreement
News Release from Hoku Materials January 9, 2012: LINK
POCATELLO, ID -- (MARKET WIRE) -- 01/09/12 -- Hoku Materials, Inc., a wholly owned subsidiary of Hoku Corporation (NASDAQ: HOKU), that is constructing a polysilicon production facility in Pocatello, Idaho, today announced the filing of a formal complaint with the Idaho Public Utilities Commission (the PUC), seeking to amend its electric service agreement with Idaho Power Company. On December 30, 2011, Hoku filed a complaint with the PUC asking that the commission stop Idaho Power from disconnecting Hoku's electrical service until the parties can resolve their dispute about the amounts that Idaho Power is charging Hoku. Today, Hoku answered Idaho Power's various allegations in response to Hoku's first complaint, and filed this additional complaint to amend the contract that was signed in 2009.
According to the complaint filed today, Hoku is alleging that Idaho Power is unfairly charging Hoku approximately $2 million each month for power not being consumed by Hoku's Idaho facility, while also demanding that Hoku pay a $5.8 million security deposit. To date, Hoku alleges that it has paid more than $11 million since April 2011 for power it did not consume, and has also paid a $4 million deposit to Idaho Power. Hoku was not connected to Idaho Power's grid until November 2011, and during its commissioning activities, Hoku only used the equivalent of less than $1,000 of power each day. Instead, Hoku alleges that it is being charged $65,000 per day. Hoku also claims to have paid more than $18 million to construct the high-voltage power lines and the substation to service its polysilicon production facility.
In Hoku's complaint, the company is asking the PUC for the following relief:
1. Elimination of the minimum payments that are due each month under the electric service agreement;
2. Monthly bills be limited to the power actually consumed by Hoku's facility;
3. Reduction of the deposit to only $4 million, eliminating the additional $1.8 million that is being requested by Idaho Power;
4. Continued electrical service; and
5. A refund of some, or all, of the amounts that were previously paid by Hoku to Idaho Power.
"We believe that Hoku is being treated unfairly by Idaho Power, and we are asking the Idaho Public Utilities Commission to help us resolve this inequity," said Scott Paul, CEO of Hoku Corporation. "When we first signed our contract with Idaho Power, we expected to be ramping-up our operations in late 2009. The financial crisis delayed our construction completion and our ramp-up plans in 2009. Now, as we are closer to beginning operations, the polysilicon market is experiencing a cyclical swing downward. We believe this to be temporary, but prudence requires that we reassess our ramp-up schedule to position the Company for long-term success in Idaho. Paying $2 million each month for power that is not being used is unsustainable for Hoku Materials, as it would be for most businesses. We feel that it is fair to seek an amendment to the contract based on the dramatic difference between the amounts we are paying for power, the amount of power we are actually consuming, and our understanding of the minimal cost that the utility is incurring to provide service to Hoku."
About Hoku Corporation
Hoku Corporation (NASDAQ: HOKU) is a solar energy products and services company with three business units: Hoku Materials, Hoku Solar, and Tianwei Solar USA, Inc. Hoku Materials markets and sells polysilicon for the solar market from its plant under construction in Pocatello, Idaho. Hoku Solar markets and installs turnkey photovoltaic systems and provides related services. Tianwei Solar USA markets and sells photovoltaic modules manufactured by Tianwei New Energy. Hoku Corporation is a majority owned subsidiary of Tianwei New Energy Holdings Co., Ltd. For more information, visit www.hokucorp.com.
Hoku, Hoku Solar, and the Hoku Corporation logo are trademarks of Hoku Corporation, and Hoku Materials is the trademark of Hoku Materials, Inc., all rights reserved. All other trademarks, trade names and service marks appearing in this press release are the property of their respective holders.
©Copyright 2012, Hoku Corporation, all rights reserved.
This press release contains forward-looking statements that involve many risks and uncertainties. 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 forward-looking statements include, but are not limited to, statements about the Company's contract with Idaho Power and its matter before the Idaho PUC. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company'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. These risks, uncertainties and other factors include, but are not limited to, uncertainty regarding the decisions of the Idaho PUC with respect to the company's complaints as well as the risks, uncertainties and other factors disclosed in the Company's most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. 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 the Company's filings with the Securities and Exchange Commission, as applicable. Except as required by law, the Company 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.