Hoku Corp., a clean energy products and services company, has entered into a $20 million credit agreement with the New York branch of China Merchants Bank Co., the sixth-largest commercial bank by assets in China.
The proceeds will be used primarily to pay for capital expenses for the polysilicon production plant under construction by Hoku’s subsidiary, Hoku Materials Inc., in Pocatello.
Hoku has up to one month to borrow all $20 million that is available under the credit agreement, and must repay all borrowed amounts on the two-year anniversary of the effective date of the credit agreement. Loans under the credit agreement will be secured by a standby letter of credit drawn by Tianwei New Energy Holdings Co. in Chengdu, China and issued to China Merchants Bank, as collateral. Tianwei New Energy Holdings Co., Ltd. currently holds approximately 60 percent of Hoku’s outstanding capital stock.
Interest on borrowed amounts will accrue at the three-month LIBOR rate plus 2 percent, and is payable in arrears every three months. Hoku will also pay a facility fee of 0.5 percent of the total loan amount per annum, payable in arrears with the interest payments, and will reimburse Tianwei for its fees and expenses in providing the standby letter of credit.
In March, the company received a $30 million infusion from Tianwei New Energy Holdings Co., a leading provider of silicon wafers, photovoltaic (PV) cells, modules and systems.
“Having just completed our first successful polysilicon production run in Pocatello, we are very pleased that Tianwei and China Merchants Bank are providing this $20 million loan to continue funding our plant capital expenditures,” said Hoku CEO Scott Paul.
He added that funding is a further indication of Tianwei’s long-term support of the project and of Hoku’s capital needs.
“Hoku is an important part of Tianwei’s international business strategy,” said Qiang Ding, chairman of Tianwei New Energy Holdings. “We remain firmly committed to supporting Hoku’s continuing efforts.”