Hoku (Nasdaq:HOKU), in a case of questionable timing, is looking to open up a long-threatened $400 million polysilicon plant in Pocatello, Idaho.
That's if it doesn't get its electricity turned off by the power company first -- or if the essentially Chinese company doesn't have tariffs levied on its product when it ships polysilicon back to China.
Days after an announced grid interconnection with Hoku, Idaho Power, the utility supplying power to the Hoku polysilicon plant under construction in Pocatello, threatened to shut off power to the site if Hoku doesn't pay its $1.9 million November electric bill, according to AP.
The problem in finding the $1.9 million to pay the electric bill is that, according to its most recent 10-K filing, Hoku "had cash and cash equivalents on hand of $3.2 million and current liabilities of $241.8 million" as of Sept. 30, 2011.
That doesn't leave the firm with a lot of wiggle room in order to make payroll and pay the bills. The firm has approximately 200 employees according to its most recent annual report. Hoku has appealed to the utility, pointing to the potential damage to the factory and equipment from the elements if left unpowered.
Hoku is a subsidiary of Tianwei New Energy Holdings, which is an affiliate of China South Industries Group Corporation (CSGC). CSGC is a mammoth firm with 191,000 employees. Tianwei manufactures polysilicon, wafers, cells and modules.
Hoku manufactures, well, nothing. Hoku started out as a fuel cell company, went public in 2005, and pivoted into being asolarmanufacturer with $2 million in "service and license revenue" in 2011 according to its most recent 10-K filing. The firm's stock trades at $0.57 with a market cap of $31.3 million as of the last day of 2011. Dwelling at that share price and market capitalization for too long can prompt a delisting from the public exchange.
Hoku Corporation's CFO, Darryl Nakamoto, resigned last week.
According to the 10-K form, Hoku has received $280 million in prepayments from PV panel manufacturers such as Hanwa SolarOne, Tianwei New Energy, Jinko Solar, and and a small prepayment from Suntech for polysilicon to be delivered between 2012 and 2016. The firm has been threatening to build the Idaho factory since 2008 -- when polysilicon was more expensive than today's depressed $23 to $28 per kilogram price. The SEC form shows amendments made to the prepayment purchase agreements as the price dropped. This must play havoc with a company's cash-flow models.
Facing a delisting, with little money in the bank, its revenue source stalled, and business model threatened by falling ASPs, where can Hoku go? Will its Chinese Fortune 1000 conglomerate parent rescue the firm? If the firm goes bankrupt, do the Chinese solar panel OEMs own the polysilicon plant? If China levies a tariff on American-made polysilicon, would Jinko and Suntech, as owners of the plant, have to pay duties to the Chinese government for dumping American poly into China?