Comtech Telecommunications Corp. Provides Business Update on Impact of Coronavirus and Status of Gilat Acquisition
Coronavirus Update and Withdrawal of Business Outlook for Fiscal 2020
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Although deemed an essential business by the
U.S. government,Comtech has modified its business practices (including prohibiting most employee travel, implementing work-from-home policies and requiring social distancing) with a view to the safety of its employees, customers, partners and suppliers. -
To date, the primary impacts of the coronavirus pandemic on
Comtech have been significant order delays and the inability of Comtech’s sales and marketing personnel to travel and/or meet with customers. -
Due to travel bans and/or forced shutdowns at customer locations,
Comtech has encountered difficulty in delivering products that had been previously ordered by its customers. -
As a result of these conditions,
Comtech has taken steps to reduce both direct and indirect costs at certain of its facilities. Additional cost reduction measures may be required. -
In light of these developments,
Comtech is withdrawing its guidance for the fiscal year endingJuly 31, 2020 previously issued onMarch 4, 2020 .
Commenting on the coronavirus’ impact on Comtech’s business,
Status of the Gilat Acquisition
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Comtech’s
$800.0 million secured credit facility to be provided byCitibank, N.A .,Manufacturers and Traders Trust Company (“M&T Bank”),Santander Bank, N.A .,BMO Harris Bank, N.A . (“Bank of Montreal”),Regions Bank ,Israel Discount Bank of New York andGoldman Sachs Bank USA has proceeded through full syndication and was oversubscribed. Although the definitive terms of the credit facility are still subject to being finalized,Comtech currently expects that the facility will consist of an$800.0 million revolver structure with no principal payments required for five years. At closing,Comtech expects total outstanding net debt of approximately$500.0 million . -
The recent price decline in
Comtech shares will have no impact on the number of shares to be issued to Gilat shareholders as merger consideration because Gilat andComtech agreed to a fixed exchange ratio under the merger agreement. As such, the number of shares issuable to Gilat shareholders upon the close of the acquisition will approximate less than 20% of Comtech’s total shares outstanding. -
Comtech and Gilat expect to finalize shortly a Form S-4 proxy statement/prospectus, a preliminary copy of which was previously filed with theU.S. Securities and Exchange Commission . The proxy statement/prospectus will be disseminated to shareholders of Gilat in connection with their meeting to vote on the acquisition. -
Although the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act has expired, the transaction is still under the review of the Federal Antimonopoly Service of the
Russian Federation . Receipt of regulatory approvals inRussia is a condition to closing the merger with Gilat. -
Other conditions to closing remain to be satisfied and
Comtech and Gilat continue to work to ensure such closing conditions can be met.
About
Additional Information and Where to Find It
This filing is being made in respect of a proposed business combination involving
This document is not a substitute for any prospectus, proxy statement or any other document that
You may obtain copies of all documents filed with the
Cautionary Statement Regarding Forward-Looking Statements
Certain information in this press release contains forward-looking statements, including but not limited to, information relating to the Company's future performance and financial condition, plans and objectives of the Company's management and the Company's assumptions regarding such future performance, financial condition, and plans and objectives that involve certain significant known and unknown risks and uncertainties and other factors not under the Company's control which may cause its actual results, future performance and financial condition, and achievement of plans and objectives of the Company's management to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, among other things: the risk that the acquisitions of UHP and Gilat may not be consummated for reasons including that the conditions precedent to the completion of these acquisitions may not be satisfied or the occurrence of any event, change or circumstance could give rise to the termination of the agreements; the risk that the regulatory approvals will not be obtained; the possibility that the expected synergies from recent or pending acquisitions will not be fully realized, or will not be realized within the anticipated time periods; the risk that the acquired businesses and pending acquisitions will not be integrated with
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