Hoku Materials (HOKU) Updates on SolarFun (SOLF) Supply Agreements

December 8, 2009 8:46 AM EST
Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, Inc. (NASDAQ: HOKU), and Solarfun Power Hong Kong Limited, or Solarfun, a subsidiary of Solarfun Power Holdings Co., Ltd. (NASDAQ: SOLF), entered into a Second Amended and Restated Supply Agreement, or the Supply Agreement, pursuant to which they have agreed to sell to Solarfun, and Solarfun has agreed to purchase from them, specified quantities of polysilicon over a ten-year period.

On October 22, 2008, they entered into Amendment No.1 to Second Amended and Restated Supply Agreement with Solarfun, or Amendment No. 1, and on March 26, 2009, they entered into Amendment No. 2 to Second Amended and Restated Supply Agreement with Solarfun, or Amendment No. 2. Pursuant to the Supply Agreement, Amendment No. 1, and Amendment No. 2, Solarfun has paid to them $37 million as a prepayment for future polysilicon product deliveries, and is obligated to pay them an additional $18 million in prepayments in increments of $8 million that was to have been paid in July 2009, $1 million that was to have been paid in each of August and September 2009, $3 million that was to have been paid in October 2009, and $5 million that was to be paid in January 2010. Solarfun did not pay the $13 million due in July through October 2009, and Hoku had the right to terminate the Supply Agreement, and retain all prepayments received.


On November 15, 2009, they entered into Amendment No. 3 to Second Amended and Restated Supply Agreement with Solarfun, or Amendment No. 3, which became effective on December 4, 2009, the date when Solarfun paid us $8 million of the $13 million prepayment balance that was past due. Under Amendment No. 3, they agreed that Solarfun could pay us the $13 million that was due in July through October 2009, in increments of $8 million, which was paid on December 4, 2009, $4 million to be paid in March 2010, and $1 million to be paid when we commence the shipment of polysilicon to Solarfun. The balance of $5 million that was payable in January 2010, is to be paid in equal monthly increments of $1 million during each of the five subsequent months after the month of the first shipment. Solarfun retains the right to terminate the Supply Agreement if Hoku has not commenced shipments by June 30, 2010, and Hoku retains the right to terminate the Supply Agreement, and retain all prepayments received, if Solarfun fails to pay any of its future prepayments when due.

Amendment No. 3 to Second Amended and Restated Supply Agreement will be filed with ther Quarterly Report on Form 10-Q for the fiscal quarter ending December 31, 2009.

You May Also Be Interested In





Related Categories

Corporate News