Tower signed a $9 million agreement to sell technology

Wants banks Hapoalim, Leumi to acknowledge accord revenue as capital raised from own sources
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Tower Semiconductor (Nasdaq:TSEM) recently signed a $9 million agreement to sell technology.

The company, which is controlled by the Israel Corporation, has already received $5 million of the sum, TheMarker has learned.

Tower declined to provide details on the transaction. But analysts covering the company believe the sale was to Tower affiliate Saifun Semiconductors. Tower has an exclusive agreement to use Saifun chipmaking technology.

The agreement is apparently designed to help Tower in its negotiations with the two main banks financing the construction of Fab 2, its second foundry in Migdal Haemek.

The company's financing agreement with banks Hapoalim and Leumi was most recently updated on April 29, 2002, but Tower wants to amend certain terms.

Under the April agreement, Tower is required to raise $39 million from its own sources by the end of July 2002, and another $30 million by year-end 2002. In 2003 the company is supposed to secure another $34 million.

Tower is negotiating to have the cash the company will be raising through a rights issue to shareholders, as part of that sum. It also wants the $15 million it is receiving from the Canadian fund OTPP Ontario Teachers Pension Plan as part of the sum, and the income from this technology deal too.