Hoku Scientific, Inc. (HOKU) announced that the company has signed a non-binding term sheet agreement with Merrill Lynch for the company’s wholly owned subsidiary, Hoko Materials Inc. Per the terms of this agreement, Hoku will able to borrow approximately $185 million for the construction and startup for their polysilicon production in Pocatello, Idaho. However, the closing of this loan and the availability of funds is still subject to several conditions, including the completion of due diligence, the negation of loan and collateral documents, and the receipt of third part consent.

“Signing this term sheet is a milestone step towards financing the construction of our polysilicon plant,” said Dustin Shindo, Chief Executive Officer of Hoku Scientific.

Hoku estimates that construction costs for Phase I will total approximately $290 million. However, Hoku’s customers – SANYO Electric Co., Ltd., Suntech Power Holdings Co., Ltd., Global Expertise Wafer Division Ltd., and Solarfun Power Hong Kong Limited – have contributed $240 million to support Hoku’s construction and start up costs.

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