Hoku Scientific Inc. announced a new financing plan for its Idaho-based polysilicon plant after it and Merrill Lynch mutually agreed to end work on raising $110 million needed to complete its pilot production phase.

Kapolei-based Hoku said that it and Merrill Lynch have mutually agreed to end its work with Merrill Lynch toward a $110 million loan needed to fully fund its $390 million construction budget on the plant being built in Pocatello.

Hoku said it had filed documents at the U.S. Securities and Exchange Commission to raise additional financing. Hoku said if the shelf registration statement is declared effective by the SEC it may make one or more offerings of debt securities, common stock, preferred stock, warrants, or a combination of the instruments to raise the $110 million.

Hoku said it would issue the securities in at least two separate offerings. It plans to raise $55 million in the first of these, proceeds of which will go toward the $112 million it needs to complete a pilot production project in the fourth quarter of this year.

A second $55 million offering would go toward the completion of the plant.

"Our project finance approach to funding the construction of our polysilicon plant doesn't make sense anymore and has become unrealistic," said Dustin Shindo, chairman, president and chief executive officer, in a press statement.

"We believe our new approach to financing the plant is more appropriate in this environment because we have reduced the amount of additional financing we need from $185 million to $110 million and delayed the timing of when these funds are required."

Hoku disclosed the financing changes in announcing its bottom-line loss declined slightly in the latest quarter as it continued to reorient its business toward production of polysilicon and photovoltaic systems installation.

The company reported a loss of $2.10 million, or 12 cents a share, in the three months ended March 31.

This compared with a year-earlier net loss of $2.12 million, or 13 cents a share.

"As we previously stated, we expected to see losses as we increased our efforts in supporting a polysilicon manufacturing and PV systems installation service business," Shindo said.

"While we expect to incur continued losses during the polysilicon plant construction phase, we are excited about our solar revenue prospects."

The company reported revenue totaled $621,000 during the quarter, as it installed photovoltaic systems and had related service contracts.

That compared with $1.14 million a year earlier, when Hoku had contracts for a fuel cell business.

Hoku's shares fell 6.6 percent, or 54 cents, to $7.71 at the close of trading.