Shares of Hoku Scientific Inc. (Nasdaq: HOKU) exploded this morning after news of a monstrous $678 million contract was released after the market close yesterday. The contract is with Suntech Power Holdings Co. Ltd. (NYSE: STP) and calls for the sale and delivery of polysilicon to Suntech over a ten-year period beginning in mid-2009.
Under the contract, up to approximately $678 million may be payable to Hoku during the ten-year period, subject to the achievement of milestones, the acceptance of product deliveries and other conditions.
The contract provides for the delivery of predetermined volumes of polysilicon each year at set prices, using a take-or-pay approach, beginning with the first shipment in 2009 and continuing over a ten-year period from the first shipment. The contract also provides for an initial deposit of $2 million to Hoku upon signing and requires that Suntech make additional prepayments for products in the amount of $45 million.
“We are pleased to have established this relationship with Suntech, a long term leader in the solar industry,” said Dustin Shindo – CEO of Hoku Scientific – in a press release. “Their rapid growth and dynamic leadership team make them an ideal partner for our company.”
“Securing a long-term supply of polysilicon from Hoku will enable us to continue to expand our manufacturing capacity and execute on Suntech’s strategic plan,” said Dr. Zhengrong Shi – Suntech’s Chairman and CEO – in a press release. “We look forward to a strong and enduring business relationship with Hoku.”
Hoku Scientific is a clean energy technologies company that historically developed and manufactured fuel cell membranes and membrane electrode assemblies for stationary (including residential and back-up power applications) and automotive proton exchange membrane fuel cells. The company is currently expanding its business to manufacture polysilicon and install solar modules for the solar market.
Suntech is a leading solar energy company in the world as measured by both production output and capacity of solar cells and modules. Suntech provides solar solutions for a green future. Suntech designs, develops, manufactures and markets a variety of high quality, cost effective and environmentally friendly PV cells and modules for electric power applications in the residential, commercial, industrial and public utility sectors.
Shares of HOKU were trading up $2.45 (53 percent) to $7.05 per share on volume of over 12 million.
Shares of STP were trading up $1.44 (4.5 percent) to $33.72 per share on volume of 2.4 million shares.