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Tower Semiconductor to ramp Fab2 further with new financing |
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May 18, 2006 at 10:08 PM |
 Tower Semiconductor has made a bold move to expand capacity of its 200mm fab to 24,000wspm in a bid to return to profitability after many years of loss making. Tower plans to increase production at Fab2 by more than 50 percent and especially at the 130nm node, where it can obtain higher margins than its current 180nm process. Fab2 has a current capacity limit of 15,000wspm and total potential capacity of 33,000wspm.
However the foundry has been forced to refinance $527 million US dollars in long-term debt with its lender banks, Bank Leumi and Bank Hapoalim both based in Israel to facilitate a cash injection of $100 million by Israel Corporation Ltd the foundry's largest investor and major shareholder. The two banks will convert 30 percent of the debt into approximately 52 million ordinary shares of Tower and reduce the interest on the debt from LIBOR plus 2.5% per annum to LIBOR plus 1.1% per annum. Long-terms loans of approximately $100 million, formerly scheduled to be paid between October 2006 and June 2007, will now be deferred to July 2007. In an unusual move, cited by Tower to speed up the purchasing and delivery of equipment, Israel Corporation will directly purchase the tools from suppliers and pass on the purchase price plus ‘related expenses' to Tower while it raises $130 million in total for the fab expansion. Israel Corporation will also receive around 66 million ordinary shares in Tower for the $100 million investment.
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