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Hoku Announces Amendments to Polysilicon Plant Engineering and Construction Contracts

Posted on: Wednesday, 9 April 2008, 18:00 CDT

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 issued change orders under its engineering, procurement and construction management services contract with Stone & Webster, Inc., a subsidiary of The Shaw Group Inc. (NYSE: SGR), and its construction contract with JH Kelly, LLC, to increase the scope of work under each contract for the completion of a 3,500 metric tons per year polysilicon production plant. The agreements, as previously amended, provided for the engineering, procurement and construction of a 2,500 metric tons per year polysilicon plant.

The change orders establish a $390 million target cost of the project, including $145 million for construction services and materials provided by JH Kelly, which is below Hoku's previously disclosed estimate of $400 million.

Shaw and JH Kelly are entitled to bonus payments if their respective cost targets are achieved. In addition, Shaw and JH Kelly are each eligible to receive additional bonus payments for achieving any of ten specific schedule milestones beginning with the pilot production of polysilicon in the fourth quarter of 2008 and ending with the final completion of the plant in September 2009. The eight interim milestones include mechanical and substantial completion of the trichlorosilane production process, the polysilicon deposition reactors and converters, the vent gas recovery systems and the balance of plant and utilities at various stages from January through September 2009 to allow operations, customer shipments and production ramp-up beginning in the first half of 2009.

"The cost targets in our updated contracts with Shaw and JH Kelly are below our estimated cost of $400 million to build the plant," said Dustin Shindo, chairman and CEO of Hoku Scientific. "The schedule targets are in-line with our plan to commence polysilicon production in the first half of calendar year 2009 with a ramp-up to full production capacity of 3,500 metric tons per year in the first half of calendar year 2010. We're very happy with the high level of professional service we are receiving from Shaw and JH Kelly."

Hoku Materials commenced construction of its planned Pocatello, Idaho, production facility in 2007. The property is graded for construction, and JH Kelly recently completed pouring the foundations for the administration and controls buildings. Phased building permits are being submitted by Hoku Materials and approved by the City of Pocatello to enable continued construction activities as the detailed engineering of the plant is completed by Shaw.

"We're pleased with our progress in the construction of the facility," said Pat Wilson, JH Kelly's on-site project manager for the Hoku plant. "JH Kelly specializes in phased construction to allow plant operations to begin before final completion. The planned completion schedule for the Hoku plant is consistent with this type of operation."

"The team at Shaw is working hard to meet Hoku's project schedule while staying within our budget," said Lou Pucher, president of Shaw's Energy & Chemical Group. "We're highly motivated to achieve our targets, and we're pleased with the overall progress to date."

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.hokuscientific.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to Hoku Materials' ability to successfully raise sufficient funds to establish polysilicon manufacturing facilities; its ability to engineer and construct a production plant for polysilicon, to receive the necessary permits to build the polysilicon plant, and the schedule for completing engineering, procurement and construction of the polysilicon plant; its ability to manufacture polysilicon; its cost to procure and construct a polysilicon production facility; the ultimate production output of Hoku Materials' planned polysilicon facility; 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, Hoku Fuel Cells, and the Hoku Scientific logo are trademarks of Hoku Scientific, Inc., and Hoku Materials is the trademark of Hoku Materials, Inc., all rights reserved.

 Contact: Hoku Scientific Tel:  808-682-7800 Email Contact

SOURCE: Hoku Scientific, Inc.

Source: MARKET WIRE

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