Independent foundry TowerJazz (Nasdaq: TSEM; TASE: TSEM) said that it will prepay $20 million of its long term bank debt, originally due in September 2011, as part of an agreement to restructure its long term debt.
TowerJazz said that signed an agreement with its bank lenders, Bank Leumi (TASE: LUMI) and Bank Hapoalim (TASE: POLI), to restructure its long term and institutional debt. TowerJazz said it will issue up to $100 million of new long term debentures, which may include long-term debentures issued in exchange for its current debentures due 2011 and 2012. The company expects the long-term debentures to have an average duration of five to seven years.
TowerJazz said that it is able to pay the loans off early due to improved operating margins, which its said have recently been much better than expected.
TowerJazz CEO Russell Ellwanger said, "The signing of the agreement with our Israeli lender banks is the initial step towards the execution of a comprehensive debt restructuring plan with our banks and bond holders, designed to significantly strengthen our balance sheet. The planned restructuring will position us as a much stronger competitor in the industry, improving our debt schedule while we work to achieve our $500 million revenue target for 2010."
TowerJazz shares fell 4.4% yesterday to close at $1.31, giving a market cap of $271.08 million. Over the past year, TowerJazz shares have traded as low as $0.26, though they have generally been over $1 per share in 2010.
Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2010
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