Alliance's stake will represent about 10 percent of Tower
Alliance Semiconductor Buys $75 Mln Stake in Tower
8/30/00 8:50:00 AM
Source: Bloomberg News
Tel Aviv, Aug. 30 (Bloomberg) -- Tower Semiconductor Ltd. agreed to sell shares worth $75 million to Alliance Semiconductor Corp., the second partner recruited by Tower as it seeks to finance construction of a $1.5 billion plant to make chips for digital cameras and music players.
Tower, which makes chips to customer specifications, is looking to raise as much as $200 million from partners to help finance the plant in the northern Israeli town of Migdal Ha'Emek. Once the recruitment effort is concluded, Alliance's stake will represent about 10 percent of the company, said co-chief executive Rafael Levin.
Tower said it is also seeking a $350 million Israeli government grant to help build the plant and $550 million in loans. The company has said the plant could help sales surge ten times to $700 million in the next five years.
''We expect that, within the coming weeks, the government grant will be approved and additional . . . partners will join the project,'' said Tower's co-chief executive, Yoav Nissan-Cohen.
For Alliance, a Santa Clara, California-based chipmaker, the investment includes a guarantee by Tower to supply memory chips for its computer and telecommunication network products. Alliance added 0.2 percent to 26.06.
''We want someone who will be our client,'' said Tower's Levin.
Tower, which trades on the Nasdaq Stock Market, rose 3.8 percent to 29.31. Israel Corp., Tower's parent, dropped 0.4 percent to 823 shekels.
In July, Tower sold a $75 million stake to Sunnyvale, California-based Sandisk Corp. Sandisk has an option to invest another $81 million.
Toshiba Corp., the No. 1 notebook maker, will provide the technology expertise to make the chips and has invested about $10 million. Toshiba also has options to boost its stake in Tower.
Tower needs to locate the other partners and secure the government grant by October so it can meet its goal of beginning production by 2002.
At a later stage, Tower may need to raise an additional $100 million from private investors or through a public share sale to finance the final construction phases of the plant.
Last week, Tower agreed to hire Jenoptik AG's M+W Zander unit and Bara Group Ltd. to build the factory. |
