TowerJazz closes definitive agreement with lender banks

MIGDAL HAEMEK, ISRAEL: TowerJazz has signed and closed a definitive agreement with its lender banks, strengthening its balance sheet and debt structure, as well as enabling its business plan forecasted growth.

According to the agreement, approximately $160 million of principal amount were extended and scheduled to be paid in 10 quarterly installments commencing the third quarter of 2013 and ending in the fourth quarter of 2015. The loans will bear an annual interest rate of labor plus 2.75 percent.

As part of the agreement, the company will prepay $30 million, on top of $20 million previously announced, both originally due next year. This is funded by its improved operating margins, which have outperformed street expectations.

Oren Shirazi, TowerJazz’s CFO, said: “Following the previous announced $80 million bonds to notes exchange, the extension of the $45 million Wells Fargo credit lines, with due dates of 2015 and 2014 respectively, a conversion of approximately $30 million of Israeli bonds, and with this additional banks agreement, we have now refinanced/ restructured more than $350 million of debt.

“Considering our greater than $160 million 2010 EBITDA target, this restructure has improved our debt to EBITDA ratio to less than 2.5X, being a servable ratio and much lower than in the past.”

Russell Ellwanger, TowerJazz's CEO, added: "This new debt balance and schedule is critical to sustaining a significant cash balance enabling quick execution of material growth opportunities. The signing of this definitive agreement with our Israeli lender banks was the most significant step towards the execution of our comprehensive debt restructuring plan.

"Servicing the reduced remaining principle with the associated due dates of all banks and bonds debt, falls easily within the operating models of the company, for a wide range of scenarios.”