Tower CEO Russell Ellwanger. 'Initial step'
Photo: Avigail Uzi
Chip maker Tower Semiconductor said on Wednesday it has agreed with its Israeli banks to prepay $20 million of its long-term bank borrowing, as a first step in a debt restructuring plan.
The company said the prepayment of the debt, originally due in September 2011, "was funded by its improved operating margins, which have recently been much better than expected".
Tower Semiconductor, also known as TowerJazz following its acquisition of US chip maker Jazz, said it was working with its lenders, Bank Leumi and Bank Hapoalim, and institutional bondholders to restructure its long-term debt.
The banks consented to the issuance by the company of up to $100 million of new long-term debentures. The company said it expects these debentures to have an average duration of five to seven years, but has not yet made any decision as to the issuance, scope or timing.
"The signing of the agreement with our Israeli lender banks is the initial step towards the execution of a comprehensive debt restructuring plan with our banks and bond holders, designed to significantly strengthen our balance sheet," Tower Chief Executive Russell Ellwanger said.
"The planned restructuring will position us as a much stronger competitor in the industry, improving our debt schedule while we work to achieve our $500 million revenue target for 2010."