Hoku Scientific, a provider of clean energy products, has signed a definitive contract to supply polysilicon to Solarfun Power Hong Kong over an eight-year period beginning in mid-2009.
Under the contract, up to $306 million is payable to Hoku during the eight-year period, subject to product deliveries and other conditions. The contract provides for the delivery of predetermined volumes of polysilicon each year, with the first shipment in the second half of 2009 and continuing over an eight-year period from the first shipment, at set prices that will decline throughout the term of the agreement.
The contract also provides for an initial deposit of $10 million to Hoku on or before December 28, 2007, and requires that Solarfun make additional prepayments for products in the aggregate amount of $45, which are to be paid to Hoku in three installments.
Under the agreement, Hoku will grant to Solarfun a security interest in its polysilicon assets to secure Hoku’s obligation to repay $55 million to Solarfun as a credit against product shipments over time.