Company debt estimated at $1 billion; creditors to meet July 31
POCATELLO — With indebtedness estimated at about $1 billion Hoku Corporation filed for Chapter 7 bankruptcy in a Pocatello federal court Tuesday. Hoku Corporation is the parent company for Hoku Materials which constructed a $700 million polysilicon manufacturing plant in Pocatello with hopes of providing hundreds of higher paying jobs in the Gate City.
Financial woes for the parent company of Hoku Materials were revealed a year ago when the company announced it had approximately $7.7 million in cash, $6.7 million in other assets, and $278.8 million in liabilities. Of those liabilities, $74.4 million were accounts payable at Hoku Materials.
Tuesday’s bankruptcy filing shows the indebtedness of Hoku Corporation has mushroomed to nearly $1 billion.
R. Sam Hopkins of Pocatello has been appointed bankruptcy trustee for the Chapter 7.
According to letters sent out to all attorneys representing Hoku creditors, the plant in Pocatello, located at One Hoku Way, will remain under lockdown with 24 hour security to “protect the facility against unauthorized entry, vandalism, theft or other matters.”
“The guards have been instructed to not allow anyone to enter the facility except as may be authorized by the bankruptcy trustee,” the letter to attorneys states.
The list of creditors in the Hoku Materials bankruptcy filing is extensive, including JH Kelly, LLC., which was the main contractor for construction of the Pocatello facility. Kelly holds liens for about $24 million in unpaid construction costs.
Ironically, JH Kelly was featured in 2011 UA Journal article published by the United Association of Union Plumbers, Pipefitters, Sprinkler fitters, Steam fitters and Service Techs for its work on the Pocatello Hoku plant.
“Perseverance, determination and faith in your members’ ability to do a good job drove Plumbers and Pipefitters Local 648 Business Manager Rod Fuger and the members of Local 468 to win the job of building Hoku Materials’ polysilicon manufacturing plant in Pocatello, Idaho,” the lead to the magazine article states.
The plant neared completion, but never went into production.
Sources have told the Journal that Kelly officials are concerned items from the plant have been removed since construction efforts stopped.
A meeting of lien holders in the Chapter 7 bankruptcy has been slated for July 31 in the Federal Courthouse in Pocatello.
In addition to the millions owed to JH Kelly, Tianwei Energy Holdings of China has liens for $114 million in loans given to Hoku as it struggled to complete the Pocatello plant.
The list of creditors in addition to Kelly and Tainwei Energy includes 30 other entities. The city of Pocatello is also an interested party in the bankruptcy because it purchased the property where the Hoku plant exists — 67 acres for $900,000 — and leased it to Hoku Materials for 99 years at a cost of $1 per year.
“I believe the city is adequately protected,” city deputy attorney Kirk Bybee said about the bankruptcy filing by Hoku.
“It’s still a piece of property that is well suited for some sort of industrial development,” said city attorney Dean Tranmer.
Since the city purchased the property and leased it to Hoku, Idaho Power Company built a 110 megawatt power substation on the property. The city also improved road access to the land to handle heavy truck traffic.
Tranmer said the bankruptcy court will now dictate what happens with the Hoku plant.
“It leaves us on hold to see what options we have as the bankruptcy unfolds,” Tranmer said.