Hoku Amends Polysilicon Supply Agreement With Tianwei
With polysilicon prices dropping, Hoku Scientific has amended two contracts with Tianwei New Energy to lower contract prices and shipment expectations, while also increasing upfront payments.
Staff -- PV Society, 7/8/2009
With polysilicon in an oversupply situation, several suppliers have had to adjust pricing and loosen up on previous contractual obligations from customers who no longer find themselves at suppliers' mercy. The latest of these announcements comes from Hoku Materials Inc. (Pocatello, Idaho), which has amended its two polysilicon supply contracts with PV cell and module maker Tianwei New Energy (Chengdu) Wafer Co. Ltd. (Chengdu, China).
Tianwei had already paid Hoku a combined $74M in prepayments, and was obligated to pay Hoku an additional $7M upon Hoku's first shipment of products in 2010. In exchange for a long-term contract price adjustment, Tianwei has agreed to pay $5M of the remaining $7M up front, and has eliminated the requirement that Hoku ship polysilicon to Tianwei before March 2010. The remaining $2M is to be paid when Hoku commences polysilicon shipments to Tianwei in 2010.
The average prices over the 10-year term of each contract were lowered by 8%, such that the total amounts payable over the 10-year term of both agreements was reduced from ~$511M to ~$468M.
"The early payment of $5M has helped us manage cash flow for our Hoku Materials subsidiary, especially as some of our other customers were requesting extensions of time to make their prepayments to us," said Dustin Shindo, chairman and CEO of Hoku Scientific. "Eliminating the early shipment requirement reduces near-term pressure for us to commence shipments, and allows us to more effectively manage the timing of our capital expenditures as we seek to raise additional financing for continuing construction costs."
Aihua Guo, Tianwei's general manager, expressed confidence in Hoku's ability to begin shipping high quality polysilicon in the months ahead.
