Independent foundry TowerJazz Ltd. (Nasdaq: TSEM; TASE: TSEM) raised an additional $5 million from Yorkville Advisors. TowerJazz allotted a unit of private equity firm Yorkville Advisors LLC 4,006,955 shares in exchange for the funds.
Sources inform "Globes" that TowerJazz will use the money to fund one-third of the $15 million cost of boosting its capacity. Last week, the company announced that it will increase the capacity at both its Israeli and California fabs, by a total of 66,000 wafers per year, in order to meet customer demand, which is exceeding current capacity. The company expects to buy $15 million worth of equipment for this purpose.
The allotment of shares is under TowerJazz's Standby Equity Purchase Agreement (SEPA) from August 2009 with Yorkville for an investment of up to $25 million in the company. TowerJazz allots the shares to Yorkville at a 3% discount of the share price on Nasdaq at the date of each allotment.
The previous allotment was made when TowerJazz's share price was around $1. The current investment was made when the share price was $1.26.
The share closed at $1.41 on Nasdaq on Friday, giving a market cap of $263 million. The share rose 4.3% in after-hours trading, and rose 2.3% in morning trading on the TASE today to NIS 5.47.
The current investment brings Yorkville's total investment in TowerJazz to $18 million, leaving up to another $7 million to invest in the company. As was the case in the previous allotments, TowerJazz bears the transaction costs. In the present allotment, TowerJazz gave Yorkville unit YA Global 142,100 shares worth $200,000 to cover the commitment fee.
TowerJazz's other shareholders may have mixed feelings about the latest investment by Yorkville, because it dilutes - again - their holdings in the company. Sources at TowerJazz have said in the past that proceeds from Yorkville's investments may be used for future acquisitions, since Tower's acquisition of California-based Jazz Semiconductors Inc. over a year ago has proved to be the right strategic move.
Published by Globes [online], Israel business news - www.globes-online.com - on February 21, 2010
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