Solarfun to get $306M of polysilicon from Hoku

Kapolei, Hawaii-based Hoku Scientific (Nasdaq: HOKU) said today it signed a deal to deliver $306 million worth of polysilicon to Qidong, China's Solarfun Power Holdings (Nasdaq: SOLF).

Deliveries of the polysilicon are expected to take place over an eight-year period beginning in the second half of 2009.

"We are pleased to have established this relationship with Solarfun," said Dustin Shindo, CEO of Hoku. "Their long-term strategic direction and their aggressive expansion plans make them an ideal partner for Hoku."

Under the agreement, Solarfun will pay an initial deposit of $10 million to Hoku by Dec. 28 of this year, with three additional prepayments of $45 million each to be paid through March 2010.

"This contract will help us realize our anticipated manufacturing cost advantages through our previously disclosed vertical integration and capacity expansion plans," said Solarfun's chairman Lu Yonghua.

Hoku, which is in the Phase I process of building a polysilicon plant in Pocatello, Idaho, for annual production up to 2,500 metric tons, said today's deal is the first order it has received for a planned Phase II expansion of the plant.

"The ultimate capacity of our Phase II expansion, in excess of the volumes we have committed to Solarfun, will be determined based on the total contracts we sign with other customers over the next several months," said Shindo.

Sanyo Electric, Suntech Power Holdings, Solar-Fabrik, as well as Solarfun, have collectively agreed to purchase approximately $1.5 billion in Phase I polysilicon over a seven to ten year period from the Pocatello plant.