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Hoku Scientific: Tax Increment Financing
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Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, Inc., established to manufacture and sell polysilicon for the solar market, announced the signing of an Economic Development Agreement with the City of Pocatello which could provide up to approximately $43 million of tax increment financing to Hoku over time.
According to the terms of the agreement, The Pocatello Development Authority has agreed to provide Hoku with tax increment financing as reimbursement for the Company's capital costs in building site infrastructure at its polysilicon production facility. This financing would be equal to 95% of the incremental property tax paid by Hoku, up to a maximum of approximately $26 million. In addition, once this initial $26 million cap is reached, Hoku will receive, as an incentive for hiring and maintaining certain numbers of employees, an additional tax reimbursement equal to 50% of the incremental property tax paid by the Company, up to a maximum of approximately $17 million.
Hoku clarified that the total amount of this financing would be reduced by the City of Pocatello's costs of constructing the public road planned to run along the southern perimeter of Hoku's project site, connecting Kraft Road to Highway 30 in Pocatello. If the City pays out of pocket, or obtains a bond to cover the cost of building the road, the initial $26 million in tax increment financing will be reduced on an equivalent basis, up to a maximum reduction of $11 million.
"We are pleased to have formalized this agreement with the City of Pocatello," said Dustin Shindo, chairman and chief executive officer of Hoku Scientific. "While the tax increment financing is very important to us, perhaps more important is the strong support we continue to receive from the City of Pocatello and the State of Idaho. We are thankful and honored to be a part of the greater Pocatello community."
Pocatello mayor, Roger Chase, added, "The City of Pocatello continues to be impressed by Hoku's efforts. We believe strongly in sustainable, diversified economic development for our community, and plan to continue our focus on advancing renewable energy initiatives in Pocatello, Chubbuck, and Bannock County."
In addition, Hoku reported today that it had reached separate agreements with four key vendors: Idaho Power Company, Polymet Alloys, Inc., BHS Acquisitions, LLC, and AEG Power Solutions USA, Inc., formerly known as Saft Power Systems USA, Inc.
Owing to recent revisions to the timing and amount of prepayment deposits expected by Hoku from some of its polysilicon customers, Hoku had previously announced that it had begun adjusting its construction and procurement schedule in order to more closely match its cash outflows with these expected receipts. The Company explained that the vendor contract amendments announced today were reached in order to better align Hoku's capital expenditures and supply chain purchase obligations to this revised schedule.
In addition, Hoku reported it had reached an agreement with Great Western Malting Company to adjust the timing of its delivery of heated process water to more closely match Hoku's revised construction and ramp-up schedule.
"We are pleased to announce these developments," said Dustin Shindo. "In each case, Hoku was able to work collaboratively with our partners to make the necessary, incremental changes to our respective contracts, in order to compensate for revisions in the timing and amount of customer prepayments. In addition to continuing our focused efforts to match cash outflows to inflows, these amendments highlight the strength of Hoku's relationship with its vendors and partners, and provide further testament to Hoku's long-term partnership approach. Notwithstanding the schedule changes, and thanks to the ongoing support of these and other partners, we continue to expect to make our first shipments of product to customers in 2009."
About Hoku Scientific, Inc.
Hoku Scientific, Inc. is a diversified, clean energy technologies company with three business units: Hoku Materials, Hoku Solar and Hoku Fuel Cells. Hoku Materials plans to manufacture, market, and sell polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar is a provider of turnkey photovoltaic systems in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells. For more information visit www.hokucorp.com
Hoku®, Hoku Scientific® and Hoku Solar® are registered trademarks, and Hoku Fuel Cells(TM) is a trademark of Hoku Scientific, Inc. Hoku Materials(TM) is the trademark of Hoku Materials, Inc., all rights reserved. All other trademarks, trade names and service marks appearing in this press release are the property of their respective holders.
Forward-Looking Statements
This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to Hoku Materials' completion of its polysilicon production facility and its ability to successfully supply waste heat in the form of process water; Great Western Malting Company's ability to return process water for re-use; successful completion of financing and road construction by the City of Pocatello; the receipt of any amount of tax increment financing from the Pocatello Development Authority; the employment of workers at the polysilicon production facility; meeting Hoku Materials' obligations under its vendor agreements with Idaho Power Company, Polymet Alloys, Inc., BHS Acquisitions, LLC, AEG Power Solutions USA, Inc., formerly known as Saft Power Systems USA, Inc., and under Hoku Materials' polysilicon supply contracts; the performance by Hoku Materials' polysilicon supply customers and vendors of their obligations under their respective contracts, including polysilicon customers making timely prepayments; the alignment of Hoku Materials' supply chain purchase obligations to the construction and procurement schedule; Hoku Scientific's (including Hoku Materials) future financial performance; Hoku Scientific's (including Hoku Materials) business strategy and plans; and objectives of management for future operations. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause Hoku Scientific's actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in Hoku Scientific's filings with the Securities and Exchange Commission, as applicable. Except as required by law, Hoku Scientific does not assume any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Contact:
In Hawaii:
Hoku Scientific
Tel: 808-682-7800
Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, Inc., established to manufacture and sell polysilicon for the solar market, announced the signing of an Economic Development Agreement with the City of Pocatello which could provide up to approximately $43 million of tax increment financing to Hoku over time.
According to the terms of the agreement, The Pocatello Development Authority has agreed to provide Hoku with tax increment financing as reimbursement for the Company's capital costs in building site infrastructure at its polysilicon production facility. This financing would be equal to 95% of the incremental property tax paid by Hoku, up to a maximum of approximately $26 million. In addition, once this initial $26 million cap is reached, Hoku will receive, as an incentive for hiring and maintaining certain numbers of employees, an additional tax reimbursement equal to 50% of the incremental property tax paid by the Company, up to a maximum of approximately $17 million.
Hoku clarified that the total amount of this financing would be reduced by the City of Pocatello's costs of constructing the public road planned to run along the southern perimeter of Hoku's project site, connecting Kraft Road to Highway 30 in Pocatello. If the City pays out of pocket, or obtains a bond to cover the cost of building the road, the initial $26 million in tax increment financing will be reduced on an equivalent basis, up to a maximum reduction of $11 million.
"We are pleased to have formalized this agreement with the City of Pocatello," said Dustin Shindo, chairman and chief executive officer of Hoku Scientific. "While the tax increment financing is very important to us, perhaps more important is the strong support we continue to receive from the City of Pocatello and the State of Idaho. We are thankful and honored to be a part of the greater Pocatello community."
Pocatello mayor, Roger Chase, added, "The City of Pocatello continues to be impressed by Hoku's efforts. We believe strongly in sustainable, diversified economic development for our community, and plan to continue our focus on advancing renewable energy initiatives in Pocatello, Chubbuck, and Bannock County."
In addition, Hoku reported today that it had reached separate agreements with four key vendors: Idaho Power Company, Polymet Alloys, Inc., BHS Acquisitions, LLC, and AEG Power Solutions USA, Inc., formerly known as Saft Power Systems USA, Inc.
Owing to recent revisions to the timing and amount of prepayment deposits expected by Hoku from some of its polysilicon customers, Hoku had previously announced that it had begun adjusting its construction and procurement schedule in order to more closely match its cash outflows with these expected receipts. The Company explained that the vendor contract amendments announced today were reached in order to better align Hoku's capital expenditures and supply chain purchase obligations to this revised schedule.
In addition, Hoku reported it had reached an agreement with Great Western Malting Company to adjust the timing of its delivery of heated process water to more closely match Hoku's revised construction and ramp-up schedule.
"We are pleased to announce these developments," said Dustin Shindo. "In each case, Hoku was able to work collaboratively with our partners to make the necessary, incremental changes to our respective contracts, in order to compensate for revisions in the timing and amount of customer prepayments. In addition to continuing our focused efforts to match cash outflows to inflows, these amendments highlight the strength of Hoku's relationship with its vendors and partners, and provide further testament to Hoku's long-term partnership approach. Notwithstanding the schedule changes, and thanks to the ongoing support of these and other partners, we continue to expect to make our first shipments of product to customers in 2009."
About Hoku Scientific, Inc.
Hoku Scientific, Inc. is a diversified, clean energy technologies company with three business units: Hoku Materials, Hoku Solar and Hoku Fuel Cells. Hoku Materials plans to manufacture, market, and sell polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar is a provider of turnkey photovoltaic systems in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells. For more information visit www.hokucorp.com
Hoku®, Hoku Scientific® and Hoku Solar® are registered trademarks, and Hoku Fuel Cells(TM) is a trademark of Hoku Scientific, Inc. Hoku Materials(TM) is the trademark of Hoku Materials, Inc., all rights reserved. All other trademarks, trade names and service marks appearing in this press release are the property of their respective holders.
Forward-Looking Statements
This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to Hoku Materials' completion of its polysilicon production facility and its ability to successfully supply waste heat in the form of process water; Great Western Malting Company's ability to return process water for re-use; successful completion of financing and road construction by the City of Pocatello; the receipt of any amount of tax increment financing from the Pocatello Development Authority; the employment of workers at the polysilicon production facility; meeting Hoku Materials' obligations under its vendor agreements with Idaho Power Company, Polymet Alloys, Inc., BHS Acquisitions, LLC, AEG Power Solutions USA, Inc., formerly known as Saft Power Systems USA, Inc., and under Hoku Materials' polysilicon supply contracts; the performance by Hoku Materials' polysilicon supply customers and vendors of their obligations under their respective contracts, including polysilicon customers making timely prepayments; the alignment of Hoku Materials' supply chain purchase obligations to the construction and procurement schedule; Hoku Scientific's (including Hoku Materials) future financial performance; Hoku Scientific's (including Hoku Materials) business strategy and plans; and objectives of management for future operations. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause Hoku Scientific's actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in Hoku Scientific's filings with the Securities and Exchange Commission, as applicable. Except as required by law, Hoku Scientific does not assume any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Contact:
In Hawaii:
Hoku Scientific
Tel: 808-682-7800