SEC – ‘UPLOAD’ from 9/6/05 re: Tower Semiconductor Ltd – ‘LETTER’

On:  Tuesday, 9/6/05, at 4:50pm ET   ·   Private-to-Public:  Filing ¶  –  Release Delayed to:  7/18/06   ·   Accession #:  0-5-46029

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Delayed-Release Comment or Other Letter from the SEC
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: LETTER      Comment or Other Letter from the SEC                  10±    43K 


Mail Stop 6010                                                                  

August 22, 2005                                                     

Tower Semiconductor USA                                                         
4300 Stevens Creek Blvd., Suite 175                                             
San Jose, CA 95129                                                              
As Agent for Service of Tower Semiconductor Ltd.                                

Re:       Tower Semiconductor Ltd.                                  
Registration Statement on Form F-2                              
Filed July 27, 2005                                                 
File No. 333-126909                                             
Form 20-F for the Year Ended                                    
December 31, 2004                                                   
Forms 6-K                                                       
Filed May 26, 2005 and August 3, 2005                               
File No. 0-24790                                                    

Dear Sir/Madam:                                                                 

We have limited our review of your filing to those issues we        
have addressed in our comments.  Where indicated, we think you                  
should                                                                          
revise your document in response to these comments.  If you                     
disagree,                                                                       
we will consider your explanation as to why our comment is                      
inapplicable or a revision is unnecessary.  Please be as detailed               
as                                                                              
necessary in your explanation.  In some of our comments, we may                 
ask                                                                             
you to provide us with information so we may better understand                  
your                                                                            
disclosure.  After reviewing this information, we may raise                     
additional comments.                                                            

Please understand that the purpose of our review process is         
to                                                                              
assist you in your compliance with the applicable disclosure                    
requirements and to enhance the overall disclosure in your filing.              
We look forward to working with you in these respects.  We welcome              
any questions you may have about our comments or any other aspect               
of                                                                              
our review.  Feel free to call us at the telephone numbers listed               
at                                                                              
the end of this letter.                                                         

Form F-2                                                                        

Fee Tale                                                                        
1. It appears that the rights should be registered and included in              
the fee table.  Please revise or advise.                                        
2. We note you are registering $25.5 million in securities to be                
issued upon exercise of the rights, yet the cover page of the                   
prospectus states that you are distributing transferable rights to              
purchase up to $50 million of debentures.  Please reconcile.                    

Prospectus Cover Page                                                           
3. We note the fourth paragraph, where you disclose that Israel                 
Corp., SanDisk Corporation, and Alliance Semiconductor Corporation              
have already committed to exercise rights to be issued to them.                 
We                                                                              
also note that "certain of our shareholders" have agreed to                     
transfer                                                                        
their unexercised rights to Israel Corp.  Provide a thorough legal              
analysis of why you believe the simultaneous public and private                 
offerings and the communications related thereto are consistent                 
with                                                                            
Section 5 of the 1933 Act.  We will have further comments.                      

Questions and Answers About the Rights Offering, page 2                         
4. Explain the business reasons for structuring this as a rights                
offering for convertible debentures in the principal amount of $1               
per                                                                             
share.  If your intent was to reduce the dilution of your existing              
shareholders, why are they not given rights to purchase additional              
shares?                                                                         

How will principal and interest be paid, page 2                                 
5. Explain in more detail the last sentence regarding the non-                  
payment                                                                         
of accrued interest.                                                            
6. Expand to describe the possible postponement of payments under               
the                                                                             
debentures, and supplementally explain why you believe this                     
provision                                                                       
is consistent with the requirements of the Trust Indenture Act of               
1939.                                                                           
7. Add a separate Q & A to discuss the current and future                       
subordination of the debentures and the dollar amount of                        
indebtedness                                                                    
outstanding to which they are subordinated.                                     
8. Add a separate Q & A to disclose whether the debentures will be              
listed for trading.                                                             

Must I convert the debentures I hold into ordinary shares, page 3               
9. Please specifically state under this heading that accrued                    
interest                                                                        
will not be paid if mandatory conversion of the debentures occurs.              
We refer you to your disclosure in the last sentence on page 35.                
Why are we engaging in the rights offering, page 3                              
10. Revise the answer to this question to explain more concisely                
why                                                                             
you are engaging in this offering.  The current disclosure is                   
confusing.                                                                      
11. We note your disclosure in the penultimate sentence that you                
are                                                                             
raising the financing required by the credit facility amendment                 
from                                                                            
Israel Corp. and SanDisk "through this rights offering in order to              
allow other shareholders to participate."  Please explain this in               
more detail since your cover page states that Israel and SanDisk                
are                                                                             
not receiving securities pursuant to this registered rights                     
offering.                                                                       
Discuss supplementally the integration issues that arise with this              
transaction, which you appear to have structured as a combined                  
public/private offering, and why you believe it is consistent with              
Section 5 of the 1933 Act, as we noted in our previous comment.                 
We                                                                              
may have further comments.                                                      

How do you transfer your rights, page 4                                         
12. Explain in more detail the very unusual one-day NASDAQ listing              
of                                                                              
the rights.  Are you aware of other registered offerings that have              
done this?                                                                      

Can you sell or give away your rights, page 5                                   
13. Because there are no dates filled in, we are unable to                      
determine                                                                       
the order in which these events will take place.  For example,                  
when                                                                            
will the trading day be relative to the expiration date?  Revise                
the                                                                             
disclosure here to clearly explain the sequence of this offering.               
Also tell us how a new investor who purchases the unexercised                   
rights                                                                          
on NASDAQ will have enough information to decide whether or not to              
exercise the right.  We may have further comments when the                      
disclosure                                                                      
is revised.                                                                     

What are the federal income tax and Israeli income tax                          
consequences,                                                                   
page 5                                                                          
14. You state under this heading that rights received under                     
employee                                                                        
share option plans "may be" taxable.  However, on page 6, you                   
disclose that the transfer and exercise of rights granted under                 
the                                                                             
employee option plans "are" taxable.  Please clarify your                       
disclosure.                                                                     
15. Please note you will need to file an opinion of counsel which               
describes the material federal income tax consequences as an                    
exhibit.                                                                        
You should also revise the disclosure here and elsewhere in the                 
prospectus to clearly describe counsel`s opinion regarding the                  
material federal income tax consequences.                                       

What happens if you choose not to exercise your rights, page 5                  
16. Expand to disclose the extent to which current shareholders                 
will                                                                            
be diluted, assuming all rights are exercised and all debentures                
are                                                                             
converted.  Also disclose the percentage of shares SanDisk,                     
Alliance,                                                                       
and Israel Corp. will hold if they convert their debentures and                 
whether they have expressed their intent to do so.                              

Risks Affecting Our Business, page 8                                            

If the amendment to our credit facility . . ., page 8                           
17. We note the reference to "other things" for which the                       
amendment                                                                       
provides.  Please describe all material terms of the amendment.                 
Describe the "certain financial ratios and covenants" to which you              
refer and any material risk to your satisfying the amended terms                
with                                                                            
regard to them.  Revise the narrative to explain any known                      
impediments to the consummation of the amendment to your credit                 
facility agreement.  The revised narrative should also state the                
date                                                                            
by which the amendment must be consummated to avoid the threat to               
your operations.  Include a reference to more detailed disclosure               
of                                                                              
the amended credit facility elsewhere in the prospectus.                        

If we do not meet conditions to receive the Israeli government                  
grants                                                                          
.. . ., page 9                                                                  
18. Explain the specific reasons for which you do not expect to                 
satisfy the requirement that you complete your Fab 2 investment.                
Give                                                                            
the time frame by which you will learn whether the Investment                   
Center                                                                          
will approve your new expansion program.  Describe concretely the               
"adverse effect on [your] operations" as referenced in the last                 
sentence.  Describe any external political, economic or other                   
considerations that may impact your receipt of grants and benefits              
from the Israeli government.                                                    

If we are considered to be a passive foreign investment company .               
..                                                                              
.., page 22                                                                     
19. State whether you have been found to be a PFIC in past years                
or                                                                              
other reasons why you believe there to be a material risk that you              
may be found to be a PFIC presently or in the future.                           

Effect of This Rights Offering on Our Convertible Securities, page              
25                                                                              
20. Please disclose the approximate number of shares that will be               
sold to employees assuming all rights offered pursuant to the                   
Employee Share Option Plans are exercised and all debentures                    
issued                                                                          
in the rights offering are converted into your ordinary shares.                 
21. Please explain in greater detail the calculation of the                     
"economic                                                                       
benefit" component of your employee share options, convertible                  
debentures and Series 1 Options and how the share conversion will               
be                                                                              
adjusted to reflect this benefit.  We refer you to your disclosure              
in                                                                              
the last paragraph on page 25 and the first full paragraph on page              
26.                                                                             

The Rights Offering, page 26                                                    

No Recommendation to Rights Holders, page 27                                    
22. Please disclose the aggregate percentage of your outstanding                
common stock currently held by your officers and directors, and                 
quantify the approximate number of shares that will be sold to                  
these                                                                           
parties assuming all rights are exercised and all debentures                    
issued                                                                          
in the rights offering are converted into your ordinary shares.                 
Please include options granted to your executive officers and                   
directors that entitle their holders to receive rights in this                  
offering.                                                                       

Our Decision Will Be Binding on You, page 28                                    
23. We note your disclosure that you, in your sole discretion, may              
waive any defect or irregularity regarding the exercise of the                  
rights.  Please disclose the factors you may consider in                        
determining                                                                     
whether to waive any such defect or irregularity.                               

Method of Exercise of Rights for Record Holders, page 28                        
24. State, if true, that the rights offering will not be extended               
beyond the subscription period.                                                 

Material Income Tax Considerations, page 43                                     

United States Tax Considerations, page 46                                       
25. Please file a tax opinion as an exhibit, and revise the                     
disclosure to describe counsel`s opinion regarding the material                 
federal income tax consequences.  Counsel should clearly opine on               
each material issue.  If counsel is unable to opine on any issue,               
so                                                                              
state, and explain why counsel cannot opine.  We may have further               
comments after the disclosure is revised.                                       
26. Remove the "No Reliance" bold paragraph on page 47, or explain              
why you believe it is appropriate to include it.  What is the                   
second                                                                          
sentence supposed to mean?                                                      
27. We note your statement at the bottom of page 47 that you                    
expect                                                                          
the fair market value of the rights to be zero.  How is this                    
consistent with your intent to list unexercised rights on NASDAQ                
to                                                                              
give holders a chance to sell them?                                             

Experts, page 55                                                                
28. We note your reference to the limited procedures performed in               
accordance with those prescribed by the Institute of Certified                  
Public                                                                          
Accountants in Israel by Brightman Almagor & Co. for the interim                
financial statements for the periods ended March 31, 2004 and                   
2005.                                                                           
In Exhibit 15.1, the letter from Brightman Almagor & Co. also                   
refers                                                                          
to these periods.  We note that you incorporate by reference your               
Form 6-K filed on May 26, 2005.  That Form 6-K includes the review              
report of Brightman Almagor & Co. dated May 26, 2005 for the March              
31, 2005 financial statements, but not the review report dated                  
April                                                                           
28, 2004 on the March 31, 2004 financial statements.  If you                    
continue                                                                        
to include these references, please also include, or incorporate                
by                                                                              
reference, each of the review reports.  Please also refer to our                
comment below with respect to your presentation of Israeli GAAS                 
review reports.                                                                 

Where You Can Find More Information; Incorporation of Information               
by                                                                              
Reference, page 56                                                              
29. Please correct the reference to a Form 6-K filed on July 24,                
2005                                                                            
at the top of page 57.                                                          

Exhibits                                                                        
30. Note that when you file all exhibits relating to this                       
transaction, we may have further comments after we have had a                   
chance                                                                          
to review them.                                                                 

Form 20-F for the Year Ended December 31, 2004                                  

Item 15. Controls and Procedures, page 81                                       
31. Under Item 15(a) of Form 20-F, your officers should disclose                
their conclusions regarding the effectiveness of your disclosure                
controls and procedures (as defined in Rules 13a-15(e) or 15d-                  
15(e))                                                                          
as of the end of the period covered by the report.  Please give us              
your conclusion as of that date and based upon the applicable                   
definition and provide the conclusion required by Item 15(a) of                 
Form                                                                            
20-F in future filings.                                                         
32. Please provide, and include in future filings, the disclosures              
required by Item 15(d) of Form 20-F.  Please note that the                      
disclosure                                                                      
relates to any changes in your internal control over financial                  
reporting identified in connection with the evaluation required by              
paragraph (d) of Rule 13a-15 or 15d-15 that occurred during the                 
period covered by the annual report that has materially affected,               
or                                                                              
is reasonably likely to materially affect, your internal control                
over                                                                            
financial reporting.  Your current disclosure appears to only                   
address                                                                         
significant changes in disclosure controls that could                           
significantly                                                                   
affect those controls subsequent to the date of your evaluation.                

Consolidated Financial Statements, page F-1                                     

Report of Independent Registered Public Accounting Firm, page F-1               
33. Please tell us why the audit opinion refers only to a U.S.                  
GAAP                                                                            
reconciliation with respect to your financial position and results              
of                                                                              
operations for the period presented and does not include your                   
statements of cash flows.  Please explain how you complied with                 
Item                                                                            
17(c)(2)(iii) of Form 20-F.                                                     
34. Please tell us about any evaluations and conclusions with                   
respect                                                                         
to your ability to continue as a going concern as of December 31,               
2004.  Please see AU Section 341.                                               

Note 12. Commitments and Contingencies, page F-18                               

A. Commitments and Contingencies Relating to FAB 2, page F-18                   

(6) Facility Agreement, page F-22                                               
35. Please tell us how you will account for the indemnification                 
agreement with TIC discussed in the last paragraph on page F-24                 
under                                                                           
U.S. GAAP.  Please cite the accounting literature upon which you                
will                                                                            
rely and explain how you will apply that literature to your                     
situation.                                                                      

Forms 6-K filed May 26, 2005 and August 3, 2005                                 
36. We note that you have incorporated by reference into all                    
effective registration statements your financial statements for                 
the                                                                             
periods ended March 31, and June 30, 2005.  In addition, the                    
financial statements for the period ended March 31, 2005 were                   
incorporated by reference into your Form F-2 filed on July 27,                  
2005.                                                                           
It appears that these statements were included under Item 8.A.5 of              
Form 20-F.  Please update your Form F-2 to include the June 30,                 
2005                                                                            
financial statements required by Item 8.5.A of Form 20-F.  Please               
also amend to include in the registration statements, or                        
incorporate                                                                     
by reference, an MD&A discussion of the most recent comparative                 
interim periods in your registration statements.                                
37. Under Item 8.A.5 of Form 20-F, you are encouraged, but not                  
required, to have your interim financial statements reviewed by an              
independent auditor in accordance with the standards of the PCAOB               
(U.S.).  We note that you include review reports of Brightman                   
Almagor                                                                         
& Co. in accordance with standards prescribed by the Institute of               
Certified Public Accountants in Israel for interim financial                    
statements.  Since the review was not conducted in accordance with              
the standards of the PCAOB (U.S.), you should remove the                        
references                                                                      
to those review reports in your Form F-2 and not include or                     
incorporate by reference those review reports from your Forms 6-K.              
Alternatively, if you believe that inclusion of those review                    
reports                                                                         
is required or necessary, then we believe that you should include               
cautionary language where you refer to those reports and                        
immediately                                                                     
prior to the reports to inform investors that the reviews were not              
conducted in accordance with the standards of the PCAOB (U.S.) and              
describe the differences between a review conducted in accordance               
with the standards of the PCAOB (U.S.) and the standards of the                 
Institute of Certified Public Accountants in Israel.                            

Form 6-K Filed August 3, 2005                                                   
38. In future filings please provide all of the disclosures                     
required                                                                        
by Item 10(e) of Regulation S-K with respect to each non-GAAP                   
financial measure you disclose.                                                 

*     *     *                                                                   
As appropriate, please amend your registration statement in         
response to these comments.  You may wish to provide us with                    
marked                                                                          
copies of the amendment to expedite our review.  Please furnish a               
cover letter with your amendment that keys your responses to our                
comments and provides any requested information.  Detailed cover                
letters greatly facilitate our review.  Please understand that we               
may                                                                             
have additional comments after reviewing your amendment and                     
responses                                                                       
to our comments.                                                                

We urge all persons who are responsible for the accuracy and        
adequacy of the disclosure in the filing to be certain that the                 
filing includes all information required under the Securities Act               
of                                                                              
1933 and that they have provided all information investors require              
for an informed investment decision.  Since the company and its                 
management are in possession of all facts relating to a company`s               
disclosure, they are responsible for the accuracy and adequacy of               
the                                                                             
disclosures they have made.                                                     

Notwithstanding our comments, in the event the company              
requests                                                                        
acceleration of the effective date of the pending registration                  
statement, it should furnish a letter, at the time of such                      
request,                                                                        
acknowledging that:                                                             

?       should the Commission or the staff, acting pursuant to                  
delegated                                                                       
authority, declare the filing effective, it does not foreclose the              
Commission from taking any action with respect to the filing;                   

?       the action of the Commission or the staff, acting pursuant to           
delegated authority, in declaring the filing effective, does not                
relieve the company from its full responsibility for the adequacy               
and                                                                             
accuracy of the disclosure in the filing; and                                   

?       the company may not assert staff comments and the declaration           
of                                                                              
effectiveness as a defense in any proceeding initiated by the                   
Commission or any person under the federal securities laws of the               
United States.                                                                  

In addition, please be advised that the Division of             
Enforcement                                                                     
has access to all information you provide to the staff of the                   
Division of Corporation Finance in connection with our review of                
your                                                                            
filing or in response to our comments on your filing.                           

We will consider a written request for acceleration of the          
effective date of the registration statement as confirmation of                 
the                                                                             
fact that those requesting acceleration are aware of their                      
respective                                                                      
responsibilities under the Securities Act of 1933 and the                       
Securities                                                                      
Exchange Act of 1934 as they relate to the proposed public                      
offering                                                                        
of the securities specified in the above registration statement.                
We                                                                              
will act on the request and, pursuant to delegated authority,                   
grant                                                                           
acceleration of the effective date.                                             

We direct your attention to Rules 460 and 461 regarding             
requesting acceleration of a registration statement.  Please allow              
adequate time after the filing of any amendment for further review              
before submitting a request for acceleration.  Please provide this              
request at least two business days in advance of the requested                  
effective date.                                                                 

You may contact Thomas Dyer at (202) 551-3641 or Kaitlin            
Tillan                                                                          
at (202) 551-3604 if you have questions regarding comments on the               
financial statements and related matters.  Please contact Adelaja               
Heyliger at (202) 551-3636 or me at (202) 551-3800 with any other               
questions.                                                                      

Sincerely,                                                          

                                                               Peggy A. Fisher
                                                              Assistant Director

cc (via fax):   David H. Schapiro, Esq.         Sheldon Krause,                 
Esq.                                                                            
Ari Fried, Esq.                         Eilenberg & Krause LLP  
Yigal Arnon & Co.                       212.986.2399            
1 Azrieli Center                                                
Tel Aviv, 67021 Israel                                          
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Tower Semiconductor USA                                                         
As Agent for Service of Tower Semiconductor Ltd.                                
August 22, 2005                                                                 
Page 1                                                                          

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘UPLOAD’ Filing		Date		Other Filings
Release Delayed to:		7/18/06		CORRESP,  UPLOAD
Filed on:		9/6/05		UPLOAD
		8/22/05		UPLOAD
		8/3/05		6-K,  UPLOAD
		7/27/05		6-K,  F-2,  UPLOAD
		7/24/05
		6/30/05		UPLOAD
		5/26/05		6-K,  UPLOAD
		3/31/05		UPLOAD
		12/31/04		20-F,  20-F/A
		4/28/04
		3/31/04
				List all Filings

1 Previous Filing that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 7/27/05  Tower Semiconductor Ltd.          F-2                    3:573K                                   Z-K Global Ltd./FA