Tower Semiconductor raises $48 million from rights offering of convertibles

By Jennifer Chiou

New York, Jan. 17 - Tower Semiconductor Ltd. announced it raised $48 million in a rights offering of convertible debentures due Jan. 12, 2012.

The debentures will be convertible at a price of $1.10 per share starting the day after the debentures are listed for trading on the Tel Aviv Stock Exchange - expected to be on or about Jan. 18 - through Dec. 27, 2011. The debentures bear interest at 5%, payable at maturity.

"We are very pleased with the success of this offering and especially with the strong vote of confidence given to Tower by our shareholders and the financial community, as demonstrated by the exercise of approximately 96% of the total rights," chief executive officer Russell Ellwanger said in a news release.

"We achieved substantial fourth quarter over third quarter revenue growth of 50%."

The company announced plans for a $50 million offering on July 27, at which point some of the company's major shareholders had agreed to buy $24.5 million of the convertibles.

Holders of rights had until 5 p.m. ET on Jan. 12 to exercise their rights to purchase the convertible debentures.

If all the rights had been subscribed, the debentures would have converted into 45,454,545 ordinary shares.

As previously announced, holders will receive one right per 138.68 shares that they own, according to an F-2 filing with the Securities and Exchange Commission.

Each right entitled holders to buy 100 debentures at a price of $100.00.

The Migdal Haemek, Israel, semiconductor foundry previously said the rights offering follows an amendment to its credit facility under which the banks agreed to provide up to $30 million of financing to cover Tower's 2005 interest payments under its bank facility, subject to the company raising a similar amount from investors.

On July 27, the company said Israel Corp. and SanDisk Corp. agreed to invest $20 million and $3.5 million, respectively.

Proceeds will also be used to ramp up production at a new semiconductor fabrication facility and for marketing expenses.

The debentures will be listed on the Nasdaq Capital Market under the symbol "TSEMG" and the Tel Aviv Stock Exchange under the symbol "TSEM.C2."

Tower Semiconductor shares closed at $1.62 on Friday.

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