Tower closes bank loan deals

September 28, 2006 – Tower Semiconductor Ltd. has closed previously announced agreements with lender banks, part of efforts to fund an accelerated ramp of its Fab 2 facility.

Back in May, Tower signed a memorandum of understanding for refinancing a $527 long-term debt with lender banks Bank Leumi and Bank Hapoalim, and a commitment from holding company Israel Corp. It also amended its credit facility, to delay repayment of $100 million in long-term loans from October of this year to July 2007.

Under the new deals, $158 million of long-term debt is being converted by the banks into equity equivalent capital notes, convertible into 51,973,684 Tower’s ordinary shares. Also, Israel Corp. is investing $100 million in Tower for an equity equivalent capital note, convertible into 65,789,474 ordinary shares.

Tower’s plans focus on its Fab 2, which offers 0.18-micron and below standard and specialized process technologies, from current output of 15,000 200mm wafers/month to 24,000 wafers/month — including “a considerable increase” in capacity for 0.13-micron process technologies. Tower’s Fab 1 currently has production capacity of 16,000 150mm wafers/month, for 1.0-0.35 process technologies.


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