Tower Semiconductor Ltd.

Robbins Arroyo LLP: Tower Semiconductor Ltd. (TSEM) Misled Shareholders According to a Recently Filed Class Action

Robbins Arroyo LLP announces that a class action complaint was filed in the U.S. District Court for the Central District of California. The complaint alleges that officers and directors of Tower Semiconductor Ltd. (NASDAQGS: TSEM) violated the Securities Exchange Act of 1934 between April 30, 2012 and January 13, 2016, by making materially false and misleading statements about Tower Semiconductor’s business prospects. Tower Semiconductor is an independent semiconductor foundry that manufactures analog intensive mixed-signal semiconductor devices in the United States, Asia, and Europe.

Tower Semiconductor Accused of Artificially Inflating the Value of Its Assets

According to the complaint, Tower Semiconductor filed several Forms 20-F with the U.S. Securities and Exchange Commission (“SEC”) from 2013 through 2015. In these filings, the company attested to the accuracy of the financial information and detailed its acquisition of a fabrication facility owned by a wholly-owned Japanese subsidiary of Micron Technology Inc. (“Micron”) for $63.63 million. The company operated this facility through TowerJazz Japan Ltd. (“TJP”), which it acquired for $62.6 million, and it set forth in its SEC filings an allocation of fair value to the assets acquired and liabilities assumed.

The company also discussed in its filings its March 2014 acquisition of a 51% equity stake in TowerJazz Panasonic Semiconductor Co., Ltd. (“TPSCo”), which it acquired for 870,454 of the company’s ordinary shares valued at approximately $7.4 million. Additionally, the company reported the debt maturity of Series F Debentures that it issued in October 2010, raising an aggregate principal amount of approximately $100 million. However, the complaint alleges these statements were false because the company failed to disclose that the value of net tangible assets of the acquisition of TJP from Micron was artificially inflated, the value of net tangible assets of the acquisition of 51% of TPSCo from Panasonic was artificially inflated, and the Series F Debentures were incorrectly accounted for to understate debt.

On January 14, 2016, analyst firm Spruce Point Capital Management issued a report about Tower Semiconductor asserting that: (1) the value of net tangible assets of the acquisition of TJP appears artificially inflated to $82 million; (2) the value of net tangible assets of the acquisition of 51% in TPSCo was artificially inflated to $181 million; and (3) the company’s improper treatment for the Series F Debentures resulted in its equity being inflated by approximately $50 million as of the third quarter of 2012. On this news, Tower Semiconductor stock fell $1.23 per share, or approximately 10%, to close at $11.24 per share on January 14, 2016.

Tower Semiconductor Shareholders Have Legal Options

Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.

 

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