Shares of Hoku Scientific fall on downgrade

Shares of Hoku Scientific Inc. hit a one-year low Tuesday after an analyst downgraded the stock because of the "uncertain" effect of financing for a polysilicon plant.

On June 12, the Hawaii-based fuel cell maker launched an equity distribution program whereby it can sell shares worth up to $54 million. Proceeds will be used for engineering, procurement and building a 3,500 metric ton polysilicon production facility in Pocatello, Idaho, plus general corporate purposes.

Besides the $54 million from the equity distribution program, Hoku estimates it will need to raise another $56 million to complete engineering, procurement and construction of the plant.

The company said it intends to raise that additional amount through one or more debt or equity offerings next year.

Broadpoint Capital analyst Colin W. Rusch on Tuesday downgraded shares to "Neutral" from "Buy," citing questions about potential share dilution from issuing more equity.

"We believe it is now unclear how to value Hoku shares as the terms of issuance are uncertain," the analyst wrote. He also withdrew his $9 share price target.

"We recommend remaining on the sidelines as we believe the stock will be stuck in limbo until the full $54 million is raised."

A Hoku spokesperson was not immediately available to respond to the downgrade by Rusch, or his assertion that their financing plans were "uncertain."

Shares fell 45 cents, or 7.4 percent, to $5.60 in early afternoon trading. On June 13, 2007, shares were $4.60.

In the last 52 weeks, shares have ranged from $5.87 to $14.88.