From the 20F you already have those investors getting some 20 MM shares on top of the roughly 13 MM shares outstanding prior to Fab 2 that gets you to about 33 MM shares when all these investors are in. These investors will not be enough (last I looked they were still short some $500 MM, but I may be wrong, I do not follow them as closely as you are), thus you will need to issue additional shares (and TSEM may not be as fortunate as last year and issue these at $30/share). The only "gift" that is hidden from the balance sheet is the IDF grant, and that is about $300 MM. There is another "gift" which is debt financing (from IDF) at preferred rates for inventories and accounts receivable, I am not sure if they get all of these financed, but some will be, but debt is coming on the debit side of a balance sheet.
The main issue is if they can sell 33,000 wafer per month at what price and what will be their break even, all these, are unknown right now. I have stated before that buying TSEM at under $10 is a possible good bet (I myself have a OB at $7.75 on TSEM), but it is a bet and far from a sure thing. Do you know how long it takes for a fab to be "positive cash flow"? Do you know what will be the impact on pricing of other competing foundries going to 300 mm thus having a 30% cost advantage? Will they generate enough cash to withstand another semis down cycle some two/three years down the road (I have i sooner than later)? They say they will start production in December, is that still the case? I thought that delays in funding are causing delays in installation of equipment.
In the meanwhile, they have to survive the next few quarters with negaive cash flow in the $10 MM per quarter, these wll eat into the "book value" directly.
I never said that IDF gets any shares, read that again.
Zeev |
