Narrative
Full Description
Project narrative
On May 21, 2012, China Merchants Bank entered into a $5 million USD loan agreement with Hoku Corporation — a now-defunct Idaho-based clean energy company that specialized in polysilicon production for solar panels — to provide working capital and general corporate financing. The proceeds were used by the borrower for general corporate purposes, including working capital advances related to its ongoing efforts to construct and operate its polysilicon manufacturing facility in Pocatello, Idaho. The maturity of the loan is five years, and the interest rate is LIBOR plus 2%. The facility was secured by a standby letter of credit issued in favor of China Merchants Bank, procured by Tianwei New Energy Holdings Co., Ltd., Hoku’s majority shareholder and a Chinese state-owned enterprise. As with previous financing agreements, Hoku also entered into a reimbursement agreement with Tianwei to cover all interest, fees, and expenses related to the standby letter of credit.
Staff comments
1. The entirety of the loan agreement is accessible at https://contracts.justia.com/companies/hoku-corp-35627/contract/575963/. The dropbox link is accessible here: https://www.dropbox.com/scl/fi/a48zb1ruj0u81q7hshiwu/Source_ID_223186.pdf?rlkey=gd7c0azdqqlucvn03upuktihv&st=pgeb46fk&dl=0 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.