Daniel Englander
Hoku’s Pocus February 1, 2008 at 11:37 AM
I developed a certain fondness for Idaho as a college student: it was the last square, brown state I had to fly over before landing in Portland. SANYO Electric probably wishes they were on that flight now. For the second time in a month, the Japanese module producer has given Hoku Scientific an extension to complete financing for it’s Pocatello, Idaho poly plant. The initial financing deadline came and went on Dec. 31. On Jan. 2 the two companies agreed on a Feb. 15 extension, which only yesterday got pushed back to May 31.
So why did SANYO, after granting Hoku a stay of execution, also extend the underlying supply deal from a seven-year, $371 million contract to 10 years and $530 million? My guess is that SANYO got hooked on Hoku’s pixie dust, agreeing to shell out a good portion of the $371 million prior to delivery to help in financing the plant. When it became apparent Hoku wasn’t getting it done in Idaho, SANYO’s only recourse was to up the deal value for Hoku to use as guaranty on outside financing. Now it’s costing SANYO an extra $160 million to get the same products six months later at the outset of what’s starting to look like a mid-term downward demand shift. I hope SANYO has a big warehouse.
How do you say “oops” in Japanese?
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