Institutions invest in Tower

Tower CEO Ellwanger: The investment by top-tier Israeli institutional investors shows confidence in the company.

Investors apparently believe that specialty foundry Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) is a good investment in view of the slew of new contracts announced by the company in the past month and its higher guidance for the third quarter announced yesterday.

Tower today announced that it has accepted about $15.8 million in orders from Israeli institutional investors for a cash investment in equity, and that it committed to issue to the investors 15.8 million shares, at NIS 3.80 per share. The price is a 4% premium on Tower's closing price on Nasdaq yesterday, when it accepted the orders.

Tower also issued to the investors warrants to purchase 3.95 million shares. These warrants will have the same terms as Tower's Series 6 warrants that are already traded on the Tel Aviv Stock Exchange (TASE).

The sale of the shares and warrants is being made under the filed shelf registration statement that the US Securities and Exchange Commission (SEC) approved on February 15, 2008, to raise up to $40 million. Last month, Tower announced that Yorkville Advisors LLC fund YA Global Master SPV Ltd. would provide an equity line of up to $25 million over the next two years. Together with the new $15.8 million investment, this prospectus has been fully exploited. Tower said that it would file a prospectus supplement about the offering with the SEC by tomorrow.

Tower CEO Russell Ellwanger said, "We consider this investment by top-tier Israeli institutional investors further evidence of the capital market's confidence in the company and its recent financial progress. This includes the steady improvement in sales and operating as reflected in the higher guidance for the third quarter, which we announced yesterday. The new guidance reflects greater quarterly growth than all other foundries that have published sales guidance for the quarter."

Capital market sources believe that Tower raised the capital in Israel, not in the US, because the terms obtained from Israeli investors were better. The company raised the money to meet its growing need for working capital and to adapt production lines at its three fabs.

Tower's share fell 4.3% at the opening on Nasdaq to $0.92. The share fell 11.6% in morning trading on the TASE today to NIS 3.34.

Published by Globes [online], Israel business news - - on September 3, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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