TowerJazz repaid all its debts in israel

19 June, 2016

The chip manufacturer repaid its $78 million loans after raising more than $100 million in a recent funding round

The chip manufacturer repaid its $78 million loans after raising more than $100 million in a recent funding round

TowerJazz repaid all of its debts to banks in Israel, totaling $78 million. This move follows a successful completion of long term non-convertible unsecured bonds’ fundraising in Mai. The early repayment will reduce TowerJazz’s financing costs by eliminating expensive interest costs, as these loans carried an annual interest rate of Libor plus 3.9%. Furthermore, the early repayment will allow TowerJazz greater flexibility due to a removal of the extensive restrictions and covenants under the Israeli banks’ loan agreement.

TowerJazz has just recently raised more than $100 million, issuing long term non-convertible unsecured bonds. The funding round’s aim was reduce financing costs – the newly issued bonds bear a 2.79% interest compared to the 4.5% interest on the now repaid bank loans.

The markets though, seem unimpressed with TowerJazz’s latest announcement – the company’s stock is losing ground since the completion of the funding round in Mai. This downward trend does not seem to be changed by the latest announcement of early repayment.   Nevertheless, many analysts are positive as for the company’s future, seeing a potential recovery of the stock price from current $12.22 (14/06/2016) to $20.

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