By Angela McDaniels
Tacoma, Wash., July 12 - Tower Semiconductor, Inc. will exchange approximately $79.6 million principal amount of its outstanding $123 million 8% convertible senior bonds due 2011 for approximately $93.6 million of new 8% non-convertible senior bonds due June 30, 2015.
The exchange will be made under an agreement reached with some institutional bondholders on July 9, according to a 6-K filed with the Securities and Exchange Commission by parent company Tower Semiconductor Ltd.
The outstanding 8% convertibles being exchanged, which are convertible into approximately 20 million Tower ordinary shares, will be canceled and retired.
The new bonds are callable at 104% of par beginning July 1, 2013. The call price declines to 102% of par beginning July 1, 2014.
In addition to the new bonds, the exchanging bondholders will receive series J warrants for approximately 25.3 million Tower ordinary shares. The warrants will be exercisable for five years at an exercise price of $1.70 per share.
The exercise price is a premium of about 20% over the average of the volume-weighted average price of the company's stock for the 15 trading days preceding July 9.
The exchange is expected to be completed by July 27.
Following the exchange, approximately $43.7 million principal amount of the convertibles will remain outstanding.
As previously reported, the company said in June that it might issue up to $100 million of new long-term debentures under its restructuring plan and that some of the dentures might be issued in exchange for its debentures due 2011 and 2012.
"Our restructuring plan is well underway with this agreement, the Wells Fargo credit line extension and the agreement with our Israeli banks which were signed and announced in June," chief financial officer said in a Sunday news release. "These agreements are instrumental in enabling TowerJazz to execute its strategic growth plan and further improve our balance sheet and financial condition."
Tower Semiconductor Ltd. and Jazz Semiconductor, Inc. manufacture integrated circuits and operate collectively under the brand name TowerJazz. They are based in Migdal Haemek, Israel, and Newport Beach, Calif., respectively.
| Issuer: | Tower Semiconductor, Inc.
|
| Issue: | Senior bonds
|
| Amount: | Approximately $93.6 million
|
| Maturity: | June 30, 2015
|
| Coupon: | 8%
|
| Price: | Par
|
| Call option: | At 104 from July 1, 2013 to July 1, 2014 and at 102 thereafter
|
| Pricing date: | July 12
|
| Settlement date: | July 27
|
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