Tower Semiconductor plans rights offering for $50 million convertibles

New York, July 27 - Tower Semiconductor Ltd. said it plans a rights offering for $50 million of convertible debentures.

Some of the company's major shareholders have already agreed to buy $24.5 million of the convertibles.

If all the rights are subscribed, the debentures will convert into 45,454,545 ordinary shares.

No timing has been set for the offering.

Holders will receive one right per 138.68 shares that they own, according to an F-2 filing with the Securities and Exchange Commission.

Each right will entitle the holder to buy 100 debentures at a price of $100.

Each debenture will convert in to 0.91 shares. The convertibles will pay interest at 5% in a single installment in 2011.

The Migdal Haemek, Israel, semiconductor foundry said the rights offering follows an amendment to its credit facility under which the banks agreed to provide up to $30 million of financing to cover Tower's 2005 interest payments under its bank facility, subject to the company raising a similar amount from investors.

Israel Corp. and SanDisk Corp. have agreed to invest $20 million and $3.5 million, respectively. The rights offering is to raise the remainder and to allow other shareholders to participate.

Proceeds will also be used to ramp up production at a new semiconductor fabrication facility and for marketing expenses.

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