Integrated circuit maker TowerJazz Semiconductor has canceled its plans to issue preferred shares, citing legal complications involving the regulatory authorities. The move required an amendment to the company's articles of incorporation.
Wednesday's brief announcement by the firm, part of the Israel Corporation controlled by Idan Ofer, seems to hint at shareholder opposition. The company received a legal opinion on its plans to increase its stock by 400 million preferred shares at 1 agora par value each, on top of 1.8 billion authorized common shares at NIS 1 par value each. Shareholders saw this as a threat to dividends and voting rights.
Preferred-shares issues are unusual. An amendment to the Companies Law discouraged multiple classes of stock, allowing preferred shares if they had no voting rights or any priority on dividends.
TowerJazz intended to change the articles so that the decision would rest with the board of directors and not shareholders. It also asked shareholders to approve future dividend payments based on the number of shares held rather than the value, giving preferred shares equal rights despite having one-hundredth of the par value of common shares.
Also, TowerJazz intends to perform a reverse share split by between 8:1 and 25:1 so that the company can continue trading on Nasdaq, where the stock has fallen below the requisite $1. Shareholders will vote on the reverse stock split at a meeting on July 26 at the company's offices in Migdal Ha'emek.
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