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Overview

Bank of China provides $30 million USD loan to Hoku Corporation for general corporate and working capital purposes in February 2011

Commitments (Constant USD, 2023)$34,094,914
Commitment Year•2011Country of Activity•United StatesDirect Recipient Country of Incorporation•United StatesSector•Industry, Mining, ConstructionFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Feb 25, 2011
Last repayment (originally scheduled)
Feb 24, 2014

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownershipAt least 25% Chinese ownership

Funding agencies

State-owned Commercial Banks

  • Bank of China (BOC)

Receiving agencies

State-owned companies

  • Hoku Corporation

Collateral providers

State-owned companies

  • Tianwei New Energy Holdings Co., Ltd

Loan description

Bank of China provides $30 million USD loan to Hoku Corporation for general corporate and working capital purposes in February 2011

Interest rate (t₀)•2.864%Interest type•Variable Interest RateMaturity•3 years

Collateral

The loan was collateralized (secured) by a standby letter of credit issued by the Sichuan Branch of Bank of China, which had been procured by Tianwei, a Chinese state-owned enterprise and majority shareholder of Hoku Corporation at the time. The agreement also included a reimbursement clause under which Hoku agreed to repay Tianwei for all interests, fees, and expenses associated with the issuance and management of the letter of credit.

Narrative

Full Description

Project narrative

On February 25, 2011, Bank of China entered into a revolving credit agreement with Hoku Corporation and its subsidiary Hoku Materials — a now-defunct Idaho-based clean energy firm that specialized in polysilicon production — to provide flexible financing support for the company’s operations. The agreement allowed for one or more revolving loans in an aggregate principal amount not to exceed the lesser of $30 million USD or the total amount secured by standby letters of credit procured by Tianwei. The proceeds were used by the borrower for general corporate purposes, particularly those associated with the continued construction and outfitting of its polysilicon manufacturing facility in Pocatello, Idaho. The maturity of the loan is the earlier of February 25, 2014 or the 15th business day prior to the expiration or termination of the standby letters of credit. The interest rate is LIBOR plus 2.4%. As of March 31, 2011, a letter of credit issued by the Sichuan Branch of Bank of China had been procured by Tianwei as collateral for the loan. Hoku also entered into a reimbursement agreement with Tianwei under which it agreed to repay all interest, fees, and expenses related to the issuance and management of the standby letters of credit. As of March 31, 2011, $25 million USD was outstanding under this facility.

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. 4. The exact amount for this loan is unclear because sources indicate the amount would not exceed the lesser of $30 million or total letters of credit. For the time being, AidData assumes the total is $30 million.