Wealthy Rise might pay $136 million to Hoku Materials over a ten-year period, subject to product deliveries and other conditions. The modified contract also adjusts the date when Hoku Materials is obligated to start delivery of polysilicon by three months from March 31, 2010 to June 30, 2010 and adjusting the dates for price adjustments and termination rights in the event of a delay in starting shipment. Wealthy Rise has the right to end the amended supply agreement, and recover any prepayments made, if Hoku Materials has not started shipments by October 31, 2010, and Hoku Materials has the right to end the agreement, and retain all prepayments received, if Wealthy Rise fails to pay any of its future prepayments when due.
Hoku Materials received a primary deposit of $7 million from Wealthy Rise after signing, and the amendment needs that Wealthy Rise make four additional deposits in June, August, October and December 2009, each in the amount of $3.3 million. Wealthy Rise will make a final payment of $200,000 upon receipt of the first shipment of product from Hoku Materials. As per the agreement, Hoku Materials will grant to Wealthy Rise a security interest in its polysilicon assets to secure Hoku Materials’ obligation to repay $20.4 million to Wealthy Rise as a credit against product shipments over time.
Hoku Materials confirmed that all of its customers are now present with their prepayments, and that the company is in active discussions with other potential customers for the possible resale of the recaptured polysilicon capacity, which includes additional prepayments for products.
We are pleased to have found a way to move forward in a manner that benefits both Hoku and Solargiga, said Dustin Shindo, chief executive officer (CEO) of Hoku Scientific. As evidenced by this and other recently-announced contract amendments, Hoku is focused on working with its customers and partners to jointly and successfully navigate the current market turbulence. We look forward to a long and mutually-beneficial business relationship with Solargiga.
Hoku has shown an uncommon commitment to the long-term partnership between our companies. This long-term polysilicon supply contract is important for Solargiga’s future expansion plans. We are pleased to move forward with Hoku and to have achieved a win-win solution for both parties, said Wealthy Rise’s CEO, Y.I. Hsu.
