Narrative
Full Description
Project narrative
On August 16, 2010, China Merchants Bank entered into two loan agreements totaling $10 million USD with Hoku Corporation — a now-defunct Idaho-based clean energy company that specialized in polysilicon production for solar panels — to support the company's financing needs. On August 26, 2010, the bank entered a $5 million USD loan agreement with Hoku. The proceeds were used by the borrower for general corporate purposes, including ongoing development of its polysilicon production facility in Pocatello, Idaho. The maturity of the loans was two years, and the interest rate is LIBOR plus 2%, with an option for the borrower to instead pay interest at China Merchants Bank’s prime rate on tranches of at least $1 million USD. The loans were fully secured by standby letters of credit drawn by Tianwei in Chengdu, China and issued to China Merchants Bank as collateral. Hoku also entered into reimbursement agreements with Tianwei, agreeing to cover all interest, fees, and expenses related to the standby letters of credit. As of March 31, 2011, the entire $15 million USD was outstanding.
Staff comments
1. The entirety of the loan agreement is not available. However, Form 10-K from the company is available for descriptions of the loan. It can be accessed at https://getfilings.com/sec-filings/110715/HOKU-SCIENTIFIC-INC_10-K/. 2. Hoku Corporation was a U.S.-based clean energy company headquartered in Pocatello, Idaho. It began in fuel cell technology before transitioning to solar manufacturing. In 2009, it became majority-owned by China’s Tianwei New Energy Holdings. Hoku declared bankruptcy in 2013, and its assets were liquidated. 3. AidData estimates the interest rate by adding the margin (2%) to 6 months LIBOR.