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Tower Announces Plan to Further Ramp Up its Fab 2 Capacity
MIGDAL HAEMEK, Israel — July 16, 2007 — Tower Semiconductor Ltd. (NASDAQ: TSEM; TASE: TSEM), a pure-play independent specialty foundry, announced today that the Company is exploring unique tool acquisition opportunities which would significantly expand Fab2 capacity beyond 24,000 wafers per month, primarily in advanced technologies (0.13u and below), in a cost effective manner. Further to the recently announced raising of $40 million in long term-bonds, Tower concluded today the signatures of letters of intent (“LOIs”) with its lender banks, Bank Leumi and Bank Hapoalim, and with Israel Corporation, a major shareholder, to provide credit lines totaling up to $60 million, in order to secure the funding of the equipment required for the ramp up. Loans borrowed under the credit lines will bear interest at an annual rate of LIBOR plus 3% and will be repayable by no later than March 2010. The LOIs are subject to the signing and closing of definitive agreements and the receipt of corporate approvals. They also contemplate that the Company will pay the banks and TIC customary fees, including issuing warrants for an aggregate amount of approximately 1.5% of the Company’s fully diluted share capital with an exercise price of $2.04. Russell Ellwanger, Tower’s chief executive officer, said: “Fab2 continues to run at greater than 90% utilization with customer forecasted demand exceeding the current capacity level. In order to meet this demand, we are evaluating several cost effective opportunities to increase Fab 2’s capacity beyond 24,000 wafers per month. These opportunities, if materialized, would significantly increase our sales, cash flow and operational results, with a fast pay-back-period and a high return-rate-on-investment (ROI). The LOIs signed with the banks and TIC, as well as the funds we raised in June through long-term bonds, will enable us to act quickly to leverage these opportunities.” About Tower Semiconductor Ltd. Tower Semiconductor Ltd. is a pure-play independent specialty wafer foundry established in 1993. The company manufactures integrated circuits with geometries ranging from 1.0 to 0.13-micron; it also provides complementary technical services and design support. In addition to digital CMOS process technology, Tower offers advanced non-volatile memory solutions, mixed-signal & RF-CMOS, and CMOS image-sensor technologies. To provide world-class customer service, the company maintains two manufacturing facilities, each with standard and specialized process technology processes: Fab 1 ranging from 1.0 to 0.35 and Fab 2 featuring 0.18 and 0.13-micron. Tower's web site is located at http://www.towersemi.com.
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