Specialty foundry Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) today announced that it has summoned a special general shareholders meeting to approve a reverse share split in order to be in compliance with the Nasdaq Capital Market continued listing requirements. The meeting will be held in Migdal Ha'Emek on July 26.
The shareholders will also be asked to approve an increase in the number of authorized ordinary shares and authorized share capital, and to authorize preferred shares.
Tower's share price has traded below $1 since March 10, and is consequently not in compliance with Nasdaq listing requirements and is liable to relegation from the index, unless it can boost its share price over the threshold by September 17.
To be listed on the Nasdaq General Market, Tower must boost its share price to over $4.
Market sources believe that Tower will try to reach a share price of $9, from its current price of $0.80, through a share consolidation at a ratio of between 1:10 and 1:12. The main purpose of the measure is to expose the share to large private equity and hedge funds, which may not invest in shares traded at less than $5.
Tower reportedly does not want for its share to be traded too close to the $5 level, in order to avoid falling below this threshold due to a drop of a few percent in its share price. It is seeking a margin of safety to interest large investors.
Tower CFO Oren Shirazi told "Globes" that the company wants to carry out the share consolidation even if, by September, its share price is traded above $1 for ten consecutive trading days (the Nasdaq Capital Market requirement). "We want big institutions to invest in the share and to return to the Nasdaq General Market," he said.
Tower's share price fell 0.4% by mid-afternoon on the TASE today to NIS 3.15, after falling 2.6% on Nasdaq yesterday to $0.80, giving a market cap of $253 million.
Published by Globes [online], Israel business news - www.globes-online.com - on June 12, 2012
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