The solar energy company will need additional funds to begin production
POSTED: 01:30 a.m. HST, Nov 05, 2010
Honolulu-based solar energy products developer Hoku Corp. said yesterday it will require more time and money to complete a giant polysilicon manufacturing plant in Idaho long beset by financing and construction difficulties.
SECOND-QUARTER LOSS$2 million
YEAR-EARLIER LOSS$1.2 million
Hoku also said its previous $390 million-to-$410 million estimate of the cost to complete the plant at full production capacity will be low. However, Hoku didn't provide a revised estimate because it is still assessing technology and negotiating with vendors.
The publicly traded company provided the construction update as part of releasing its fiscal second-quarter earnings for the July-to-September period.
Hoku reported a net loss of $2 million, or 4 cents a share, up from a net loss of $1.2 million, or 6 cents a share, in the same period last year.
Revenue for the recent quarter totaled $1.2 million, down from $1.5 million a year earlier.
Most of Hoku's revenue currently comes from the installation in Hawaii of photovoltaic electrical generation systems while it works to complete its plant in Pocatello, Idaho.
The anticipated cost and time increases for finishing plant construction represent another setback for Hoku, though the company said it continues to make progress on the project.
"We continued executing on our business plan during the past quarter," Scott Paul, Hoku president and chief executive officer, said in a statement. "We have made significant progress on the remaining construction of our facility."
Hoku, formed as a fuel-cell technology development firm in 2001, was on the verge of shutting down in July 2009 as it struggled to finance its polysilicon plant. Then last year, China-based Tianwei New Energy Holdings Co. acquired a controlling interest in Hoku, and it has been helping raise money to finish construction.
Construction progression has largely been dictated by the availability of financing, which Hoku said is the primary reason for the latest delay.
In the recent quarter, Hoku said it secured $25 million in financing that let it boost the number of construction workers on the project site daily to about 500 from about 150 in the previous quarter.
Hoku also said it secured $42 million in credit agreements last month that will allow it to finish the plant's initial phase with an annual polysilicon production capacity of 2,500 metric tons.
The company expects to complete a second phase taking production to 4,000 metric tons by the end of next year. Financing for the second phase is anticipated to come from polysilicon sales and additional debt or equity offerings.
In preparing for plant operations, Hoku has begun to seek a president for its polysilicon production subsidiary Hoku Materials. Serving as interim president will be (Mike) Tao Zhang, a Tianwei vice president.
Hoku also plans to increase staff at Hoku Materials to about 80 from 62 by the end of the year.
Hoku shares closed at $3.03 yesterday, up 18 cents on the Nasdaq exchange after the announcements.