Tower Semiconductor Completes Merger with Jazz Technologies

MIGDAL HAEMEK, Israel & NEWPORT BEACH, Calif.—(BUSINESS WIRE)—September 19, 2008— Merger Creates:

--

 

Leading specialty foundry with increased capacity and scale offering a comprehensive process portfolio;

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Cross-selling opportunities among diverse customer bases of both companies;

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Financially strong merged company with:

-- Trailing twelve month (TTM) revenues of approximately $440 million;

-- Pro forma TTM EBITDA of approximately $120 million (including effects of $40 million of expected cost synergies savings)

Gilbert F. Amelio Retires as Jazz Chairman and CEO, Will Serve as Special Advisor to Towers Board of Directors

Tower Semiconductor Ltd. (NASDAQ: TSEM) (TASE: TSEM), an independent specialty wafer foundry, today announced the completion of its merger with Jazz Technologies, Inc. (formerly AMEX: JAZ), a leader in Analog-Intensive Mixed-Signal (AIMS) foundry solutions. As a result of this transaction, both Jazz Technologies and its subsidiary, Jazz Semiconductor, Inc., became wholly owned subsidiaries of Tower Semiconductor. Towers name will remain the same and Jazz Semiconductor will be known as Jazz Semiconductor, Inc., a Tower Group Company. Russell Ellwanger, Towers chief executive officer, has been named chairman of the board of directors of Jazz and will be responsible for developing final details of the merged organizational structure and the integration plan over the next several months.

Commenting on the transaction Ellwanger stated, We expect the merger of the two companies to provide expanded opportunities for growth based on the significant cross-selling opportunities and the broader, more complete product, technology, and service portfolio we are now able to offer to customers. These opportunities further enhance the immediate benefits we expect the merger to provide to our cost structure, which when combined with the recently announced anticipated restructuring of our debt, we expect to result in significant improvements to our financial results, EBITDA and cash flow margins, as well as greatly improve the balance sheet of the combined company.

Paul Pittman, Jazzs Chief Financial Officer, said, We are pleased with the strong support from Jazzs stockholders for this merger. More than 66% of our stockholders voted in favor of this merger and less than one percent voted against it. We look forward to working with Tower to enhance our corporate value for the benefit of Towers stockholders.

The merger creates a financially stronger company with trailing twelve month (TTM) revenues of approximately $440 million and pro forma TTM EBITDA of approximately $120 million, including the effects of an expected additional $40 million in annual cost saving synergies previously announced in conjunction with the merger. Following the anticipated closing of Tower s restructuring transaction with its lenders based on the Memorandum of Understanding reached last month, Tower s balance sheet will be significantly improved and reflect a $250 million reduction in debt and corresponding $250 million increase in shareholders equity. This restructuring is also expected to result in improved financial performance and cash flow margins due to lower interest expense as a result of the reduced debt.

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