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Hoku Scientific chief steps down

Dustin Shindo, co-founder and CEO of Hoku Scientific, will step down from the company he’s helmed since 2001, even as it continues to struggle with financing for a planned $390 million polysilicon production facility in Pocatello.

Effective April 1, Hoku Chief Operating Office Scott Paul will take Shindo’s place as president and CEO, and Wei Xia, a Hoku board member and current vice general manager of Baoding Tianwei Group, will serve as chairman of the board, according to an announcement from the company on Feb. 16.

Jerrod Schreck, currently Hoku’s vice president of business development, has also been promoted to chief strategy officer, a newly approved executive management position. His appointment will be effective April 1.

Shindo cited personal reasons for his departure from Hawaii-based Hoku, a materials science company focused primarily on the solar industry. He plans to continue advising the board on strategic matters.

The board of directors had hoped Shindo would stay on as CEO for a longer period of time, stated Xia, whose company, Boading Tianwei Group, last year acquired a controlling interest in Hoku through its subsidiary Tianwei New Energy Holdings.

“However, we understand Mr. Shindo’s reasons for stepping down, and we are extremely confident in Mr. Paul’s ability to lead Hoku as the company completes construction and begins operating its polysilicon plant this year,” he said.

Bringing Hoku’s polysilicon plant on-line in Pocatello has proved challenging amid the global recession. In its third quarter financials, released on Jan. 27, the company reported wider losses, financing delays and the possibility that a key customer may terminate its supply agreement and seek a refund of its prepayments.

China-based Tianwei New Energy Holdings, a solar energy firm that had been a customer of Hoku, agreed in September 2009 to offer $50 million in debt financing in exchange for 60 percent ownership in the company.

But when the infusion of capital didn’t arrive as expected in November, Hoku had to hold off on a key reactor demonstration – pushing back the construction schedule and delaying shipments to customers like Suntech, which has already committed a prepayment of $2 million but held off on an additional $15 million due to the delayed reactor test.

According to the January earnings call, Suntech may exercise its right to terminate the contract and seek a refund of its $2 million prepayment, but has so far not indicated it plans to do so.

Tianwei reportedly delivered a payment of $20 million to Hoku on Jan. 21, and the remaining balance of $30 million is expected sometime this month. If Hoku receives the full $50 million from Tianwei, as well as $55 million in anticipated customer prepayments, it could begin production of polysilicon at 2,500 metric tons per year.

If all goes according to plan, Hoku is scheduled to make its first commercial delivery of polysilicon to the solar panel market in the first half of calendar 2010. It also expects to reach its full production capacity of 4,000 metric tons per year by the end of 2010.

Shares in Hoku Scientific were valued at about $2.38 in early afternoon trading, up $0.03, or 1.28 percent, from the opening bell.

About Zach Hagadone


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