September 30, 2009
Honolulu,
HI, USA: Tianwei New Energy to Take Majority Shareholding in Hoku
Scientific
Hoku
Scientific and Tianwei New Energy Holdings, a manufacturer of
silicon wafers, photovoltaic cells, modules and systems, have
signed a definitive agreement providing for a majority investment
in Hoku by Tianwei and debt financing by Tianwei and China Construction
Bank for the construction and development of Hoku's polysilicon
production facility in Pocatello, Idaho.
The
transaction will involve the conversion of $50 million of an aggregate
of $79 million in secured prepayments previously paid by Tianwei
to Hoku under certain polysilicon supply agreements into shares
of Hoku's common stock and related warrants, plus the provision
of $50 million in initial debt financing for Hoku, together with
a commitment from Tianwei to assist Hoku in obtaining additional
financing that may be required by Hoku to construct and operate
the Pocatello facility.
The
conversion of the $50 million in secured prepayments will be reflected
in amendments to Hoku's existing supply agreements with Tianwei
that the parties intend to sign upon the closing of the transaction.
Over the term of the two supply agreements, the cancellation of
the $50 million in prepayments will reduce the price at which
Tianwei purchases polysilicon by approximately 11% per year.
Hoku
confirmed that the $50 million in debt, plus prepayments from
its existing customers, is expected to be sufficient to complete
construction to the point where it could commence shipments to
customers, and it intends to delay any additional financing until
such time. On the basis of these funding sources, Hoku reported
it is preparing to issue orders to resume full scale plant construction
at an accelerated pace upon closing of the financing, which is
expected to occur in October 2009.
In
exchange for the value being provided by Tianwei, Hoku will issue
to Tianwei 33,379,287 newly-issued shares of its common stock,
which will represent 60% of Hoku's fully-diluted outstanding shares.
Hoku will also grant Tianwei warrants to purchase an additional
10 million shares of Hoku's common stock at a price per share
equal to $2.52.
At
closing, Hoku's current shareholders will continue to own 40%
of the voting shares, and Hoku will continue to be traded publicly
on Nasdaq. Additionally, Tianwei has agreed to a one year lock-up
of 70% of its shares, further affirming its commitment to Hoku's
long-term success.
As
a result of the transaction, Tianwei will become Hoku's majority
shareholder, and will have the right to nominate a majority of
the members serving on Hoku's Board of Directors. Effective upon
closing, Hoku will increase the size of its Board from five to
seven members, three of whom will be selected from Hoku's existing
Board, and four of whom will be selected by Tianwei. Tianwei will
have the right to appoint the chairperson of the Board. Subject
to the receipt of requisite Chinese governmental approvals and
other customary closing conditions, the transaction is expected
to close in October 2009.
Further details about: Hoku
Scientific, Inc and Tianwei
New Energy Holdings
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