The company announced that as of March 31, 2012, its preliminary estimates of cash, other current assets and current liabilities was approximately $7.7 million, $6.7 million, and $278.8 million, respectively. The current liabilities include approximately $74.4 million of accounts payable at Hoku Materials. Due to the delinquency of unpaid construction obligations, liens have been filed against the Hoku Materials polysilicon plant, and some lienholders have begun foreclosure proceedings in the Idaho courts.
The Company announced that it received an additional loan from China Merchant's Bank, New York Branch, which is secured by a cash collateralized letter of credit drawn by Hoku's parent company, Tianwei New Energy Holdings Co., Ltd. ("Tianwei").
"The proceeds of the loan are insufficient to pay down current liabilities, resume construction, or start commercial operations," said Scott Paul, CEO of Hoku Corporation. "The loan proceeds will be used to fund working capital requirements while we plan for a restructuring of our liabilities, and the liabilities of our subsidiary Hoku Materials, Inc. We have retained Imperial Capital as our financial advisor to assist with this restructuring effort."
In the meantime, Hoku Materials reported that it has terminated approximately 100 of its Pocatello plant employees. This reduction in force is necessary to conserve cash while the Company pursues restructuring alternatives.
In addition, the Company reported that it has ceased business activities and terminated all staff at Tianwei Solar USA, Inc., the wholly owned subsidiary formed to market and sell Tianwei's modules in North America, and that Hoku Solar would continue to seek opportunities to sell Tianwei's modules in this market.
Commenting on Hoku Solar, the Company's wholly owned subsidiary that markets and installs turnkey photovoltaic systems and provides related services, Paul said, "We do not intend to restructure Hoku Solar, as it is operated as a standalone business, which supports its operating cash requirements from sales revenue. Hoku Solar is actively working on several of the largest utility-scale photovoltaic projects in the State of Hawaii, and fully intends to continue delivering its investment-grade PV™ solutions to its current customers, while continuing sales and marketing activities."