Hoku and Tianwei Close Financing Deal
Tianwei finalizes a majority investment in Hoku Scientific, a transaction that Hoku's board had concluded was the only viable option to avoid a Chapter 7 bankruptcy and liquidation of the Hoku Materials polysilicon business.
Staff -- PV Society, 12/23/2009
Tianwei New Energy Holdings Co. Ltd. (Chengdu, China), which provides silicon wafers, PV cells, modules and systems, has finalized the closing of its majority investment in Hoku Scientific Inc. (Honolulu). Hoku's board of directors had concluded that the transaction with Tianwei was the only viable option to avoid a Chapter 7 bankruptcy and liquidation of the Hoku Materials polysilicon business, which included the contruction of a polysilicon production facility in Pocatello, Idaho.
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Signing ceremony between Hoku and Tianwei in Beijing. |
Hoku issued 33.38 million newly issued shares of its common stock to Tianwei, representing 60% of Hoku's fully diluted outstanding shares, and will allow Tianwei to purchase an additional 10 million shares of Hoku's common stock at a price per share equal to $2.52. In exchange, Tianwei has cancelled $50M of debt that Hoku would be obligated to repay to Tianwei under previous polysilicon supply agreements, and Tianwei is loaning Hoku $50M through China Construction Bank. Hoku's current shareholders will continue to own 40% of the voting shares.
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. Hoku will increase the size of its board from five to seven members; three will be selected from Hoku's existing board, and four will be selected by Tianwei. Tianwei will have the right to appoint the chairman of the board.
Hoku has issued orders to resume construction of its Pocatello facility, and shipment of equipment that had been placed on hold pending Hoku's receipt of financing. Tianwei has also committed to assist Hoku in obtaining additional financing that may be required by Hoku to construct and operate the facility.
"We are extremely pleased to have closed our financing with Tianwei," said Dustin Shindo, Hoku's chairman and CEO. "With our near-term liquidity crisis behind us, we can now focus on the execution of our polysilicon and PV systems installation business strategies."
"A strong relationship with Hoku is very important for us," said Qiang Ding, chairman of Tianwei Group. "We are excited by the long-term opportunity we have to grow a vertically integrated PV business together with Hoku on a global scale."
