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UPDATE 1-Hoku says JH Kelly to restart Idaho plant construction

* Says to pre-pay JH Kelly $5 mln of outstanding amount * Says total outstanding amount $12 mln

Sept 22 (Reuters) - Hoku Scientific Inc HOKU.O, a supplier of raw materials to the solar industry, said construction company JH Kelly LLC would resume activity to complete Hoku's planned 4,000 tons per year polysilicon production plant.

Hoku said it had entered into a change order agreement, under which it would pre-pay $5 million of past amount due to privately held JH Kelly of about $12 million.

Kelly agreed to delay foreclosing on the $12 million lien until after Dec 1, 2009, Hoku said, adding if it made the prepayment by that date, Hoku will have until Jan 14, 2010 to pay the balance.

“Kelly also agreed to waive certain interest and other fees and charges that may be incurred as a result of the past due amounts,” Hoku said in a statement.

The company also said Kelly reaffirmed its commitment to achieve the projects key schedule dates if work resumes in October.

In July, Hoku said it initiated a temporary slowdown of construction and procurement activities at the facility in Pocatello, Idaho to preserve cash.

The company also said it was exploring sale of its assets as it was struggling to raise capital for the plant, estimated to cost $390 million to build.

Hoku said JH Kelly subsequently filed a lien claiming past due accounts payable in the amount of approximately $12 million.

Shares of the company closed at $2.27 Monday on Nasdaq.

For the alerts, please double click [ID:nWNAB1946] (Reporting by Arup Roychoudhury in Bangalore; Editing by Jarshad Kakkrakandy) (arup.roychoudhury@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: arup.roychoudhury.reuters.com@reuters.net))

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