North Coast Solar Stocks

April 2, 2009

Hoku and JH Kelly Confirm Schedule for Polysilicon Plant Construction and Start-Up

Filed under: HOKU — Tags: , , , — Jason @ 7:30 am

Thursday April 2, 2009, 7:30 am EDT

POCATELLO, ID–(MARKET WIRE)–Apr 2, 2009 — Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, Inc. (HOKU), established to manufacture and sell polysilicon for the solar market, today announced that it entered into a change order agreement under its cost plus incentive construction contract with JH Kelly, LLC, to clarify the schedule for completion of Hoku’s planned 4,000 metric tons per year polysilicon production plant.

Under the original contract, as previously amended by earlier change orders in 2008, JH Kelly had the potential to earn up to $5 million in bonus payments upon the achievement of specified schedule, budget, and safety goals. Under the change order, JH Kelly still has the potential to earn up to $5 million in bonus payments, but the weight of the bonus payments has shifted towards meeting Hoku’s schedule goals, including the reactor demonstration in the second quarter of calendar year 2009, partial commercial operation in the second half of calendar year 2009, and full commercial operation in the first half of calendar year 2010. Before the change order, $1.5 million of the $5 million in bonuses was allocated to the schedule goals. The change order increases that amount to $3.5 million of the $5 million, with the remaining $1.5 million in potential bonus payments to be awarded for achieving budget and safety goals. All bonus payments, if earned, would be payable upon final completion of the construction of the plant.

“The revised milestone schedule realigns JH Kelly’s incentives with our current schedule, which is to start-up the plant and commence shipments to our customers in the second half of calendar year 2009, which may be before our TCS plant is operational,” said Dustin Shindo, chairman and CEO of Hoku Scientific. “This is consistent with the recently announced change to our engineering and procurement agreement with Stone & Webster, Inc. As unexpected changes in the timing and amount of payments from our customers have required us to shift our schedule to manage cash, JH Kelly has proven to be a trusted and reliable partner.”

“We are very proud to be working on this polysilicon plant with Hoku,” said Mason Evans, president of JH Kelly. “Our team pushed hard through the winter to stay on schedule. We’re excited to start turning areas over to Hoku to commence operations over the next few months.”

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