SOURCE: Hoku Scientific, Inc.

Hoku Scientific, Inc.

September 22, 2009 07:15 ET

Hoku and JH Kelly Agree on Path Forward to Complete Construction of Polysilicon Plant

POCATELLO, ID--(Marketwire - September 22, 2009) - Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, Inc. (NASDAQ: HOKU), established to manufacture and sell polysilicon for the solar market, today announced that it entered into a change order agreement under its cost plus incentive construction contract with JH Kelly, LLC, to confirm the plan for JH Kelly to complete construction of Hoku's planned 4,000 metric tons per year polysilicon production plant.

In July 2009, Hoku initiated a temporary slowdown of construction and procurement activities to preserve cash while Hoku sought to raise additional capital. JH Kelly subsequently filed a lien claiming past due accounts payable in the amount of approximately $12 million. Under the terms of the change order announced today, JH Kelly agreed that it would resume construction activities upon receipt of notice from Hoku and Hoku's payment of $5 million of the past due amount. In the meantime, JH Kelly agreed to forbear from foreclosing on its approximately $12 million lien until after December 1, 2009, and if Hoku makes the $5 million prepayment by such date, Hoku will have until January 14, 2010 to pay the balance of the $12 million that is past due. JH Kelly also agreed to waive certain interest and other fees and charges that may be incurred as a result of the past due amounts.

In addition to confirming the financial path forward, JH Kelly reaffirmed its commitment to achieving Hoku's key project schedule dates if work is resumed in October. This would include completing a reactor demonstration in December 2009, completing construction of 2,500 metric tons of polysilicon production capacity in March 2010, and completing construction of the full 4,000 metric tons of capacity, including on-site trichlorosilane (TCS) production, in December 2010. The other terms of the contract remain unchanged.

"We appreciate JH Kelly's commitment to seeing this through to completion; they are a one-of-a-kind company, and have more than earned our trust and loyalty," said Dustin Shindo, chairman and CEO of Hoku Scientific.

"We've kept key staff members on-site, and we are poised to initiate an accelerated construction schedule as soon as Hoku gives us the go-ahead and fulfills its payment obligations," said Mason Evans, president of JH Kelly. "Hoku has kept us informed of their financing strategy, and we appreciate both their transparency and their dedication to making this project a success for all concerned."

About Hoku Scientific, Inc.

Hoku Scientific (NASDAQ: HOKU) is a diversified clean energy technologies company with three business units: Hoku Materials, Hoku Solar and Hoku Fuel Cells. Hoku Materials plans to manufacture, market, and sell polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar markets and installs turnkey photovoltaic systems in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells. For more information visit www.hokucorp.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to the timing of when Hoku Materials would pay JH Kelly $5 million to resume full construction of its planned polysilicon plant; the timing of when Hoku Materials and JH Kelly can complete construction and operations milestones, if at all; Hoku Materials' ability to successfully operate a polysilicon production plant, including its ability to start-up its polysilicon plant and commence shipments to customers; JH Kelly's ability to meet its construction schedule in its contract with Hoku Materials; Hoku Scientific's future financial performance; Hoku Scientific's business strategy and plans; and objectives of management for future operations. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause Hoku Scientific's actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in Hoku Scientific's filings with the Securities and Exchange Commission. Except as required by law, Hoku Scientific assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Hoku, Hoku Solar, and the Hoku Scientific logo are trademarks of Hoku Scientific, Inc., and Hoku Materials is the trademark of Hoku Materials, Inc., all rights reserved.

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