JERUSALEM, March 20 Israeli chipmaker TowerJazz
said on Thursday it agreed to trade short-term debt
for longer-term debt in a move aimed at improving its balance
The company will issue new unsecured bonds due December 2018
It was slated to pay the remaining $94 million of its debt
to bondholders in June 2015 but TowerJazz forged a deal with
U.S. and offshore institutional investors in which it will pay
$49 million next year and the rest in 2018.
TowerJazz inherited $140 million of bonds when Tower
Semiconductor bought Jazz Technologies in 2008 and paid
down $44 million in 2010.
Oren Shirazi, TowerJazz's chief financial officer, said the
company could have used much of its $120 million in cash to pay
off its debt next year but investors would find that troubling.
"It's just improving our balance sheet and enabling us to
actually have some leverage," he told Reuters. "We believe
having $49 million outstanding after next year is a very
As part of the deal, some bondholders have agreed to buy $10
million of the new bonds maturing in 2018. The bonds carry an 8
percent coupon payable in cash in two semi-annual instalments
through maturity and may be converted to ordinary Tower stock at
$10.07 per share, a 20 percent premium over the average closing
price of the five sessions ended one day prior to the signing of
Current Jazz bondholders include Principal Global Investors
and Pine River Capital Management.
"This bonds restructuring ... demonstrates a company
actively making progress on its core business, creative
M&A/joint venture, financials and balance sheet," said Chief
Executive Russell Ellwanger in a statement.
He pointed to a recent India cabinet decision to establish a
chip plant, in which TowerJazz will participate, as well as a
planned joint venture with Panasonic Corp that is
expected to close in the coming weeks.
(Reporting by Steven Scheer)