Hoku reports 2Q loss, restarts construction at Pocatello plant 

Hawaii-based solar materials maker Hoku Scientific on Oct. 22 released its second quarter 2010 financials, and provided an update on renewed construction at its polysilicon plant in Pocatello.

According to the report, Hoku suffered a net loss of $1.2 million, or 6 cents a share, in the quarter ending Sept. 30. That’s compared to a loss of $1.4 million, or 7 cents a share, last year. It ended the quarter with $9.1 million in cash, cash equivalents and short-term investments, down from $17.4 million as of March 31.

The company stated it still needs $71 million in additional funding to complete its $390 million Pocatello plant – which would produce 4,000 metric tons of polysilicon a year for the solar panel market – but restarted construction earlier this month under general contractor J.H. Kelly.

Hoku CEO Dustin Shindo said the company expects its construction work force will expand to more than 100 full-time personnel in the next few weeks, and if a deal announced in September with Tianwei New Energy Holdings Company goes through, Hoku estimated it could have the plant completed and the first customer orders shipped in the first quarter of calendar 2010.

Under the agreement, Tianwei would provide Hoku with $50 million in debt financing, $20 million of which is expected next month. The remaining $30 million would be received in December, Shindo stated in an investor call. 

In exchange, Hoku agreed to forego $50 million in secured polysilicon prepayments from Tianwei, and will sell the Chinese firm a 60 percent majority stake. Tianwei would also agree to forego its shipments of polysilicon until Hoku’s other customers have been served.

From there, the plant will ramp up production until it reaches its full capacity of 4,000 metric tons per year, which is expected to happen in the second half of calendar year 2010.

Hoku will seek future financing from a combination of prepayments from new customers, other debt sources or “possibly through a government incentive program,” Shindo said.

The company has applied for investment and tax credits through the U.S. Department of Energy and the Internal Revenue Service.

“To be clear, with the debt financing of $50 million expected from Tianwei and the $53 million of additional customer prepayments, we believe we will have sufficient funds to construct our polysilicon plant to the point where we will be producing enough polysilicon to meet our contractual obligations will all of our other customers, except Tianwei,” he said.

Shares of Hoku stock were trading at around $2.70 at midday on Oct. 23, down from $2.80 at the opening bell.

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