Tower Semiconductor Ltd. , an independent specialty foundry, today announced that it has signed and closed definitive agreements with its lender banks and Israel Corp. These agreements are based on the previously announced memorandum of understanding dated August 20, 2008.
According to the agreements, $250 million of Tower's debt to Bank Leumi, Bank Hapoalim and Israel Corp., will be forgiven in exchange for equity capital notes of the Company, exercisable into ordinary shares at $1.42 per share. This price per share represents two times the average closing price of Tower's stock on NASDAQ for the ten trading days prior to August 7, 2008, which was the date of the Company's public announcement regarding its debt restructuring negotiations with the banks and Israel Corp. The conversion of the debt into equity capital notes reduces Tower's debt by approximately $250 million, increases its shareholders' equity on its balance sheet by approximately $250 million, as well as improves its cash flow margins, statement of operations results and financial position. Further, the agreement will result in a one-time gain of approximately $130 million that will be recorded in the statement of operations of the Company for the third quarter of 2008.
