© pichetw dreamstime.com General | April 02, 2020
Comtech Telecomm Corp. issues business update
New York-based Comtech Telecommunications Corp. has issued a statement on the withdrawal of its business outlook for its fiscal year ending July 31, 2020, as well as an update on its proposed purchase of the Gilat Satellite Networks Ltd.
While categorized as an essential business by the U.S. Government, Comtech has modified operations, including prohibiting most employee travel, requiring work-from-home policies, and social distancing, in order to protect the health and welfare of its employees, customers, partners and suppliers during the current global health crisis. Regarding the business impact of COVID-19 pandemic, the company said it has experienced significant order delays and staff has been unable to travel to meet with customers, some of whom have had to cease their own operations. The result is that Comtech has not been able to completely fulfill product orders. The company has reduced both direct and indirect costs at some of its facilities and has not ruled out further cuts. In light of the developments, the company is rescinding its guidance for the fiscal year ending July 31, 2020 that was issued in March. Regarding the impending acquisition of Gilat, the company said that the recent price decline in Comtech shares will not impact the number of shares issued to Gilat shareholders as merger consideration because Gilat and Comtech agreed to a fixed exchange ratio under the merger agreement. The two companies expect to soon finalize Form S-4 proxy statement/prospectus, a preliminary copy of which was previously filed with the U.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. The two companies will continue to work to ensure the remaining closing conditions are met. In the statement, Chairman of the Board and CEO Fred Kornberg said, “Although Comtech is not immune to the disruption in the macroeconomic environment caused by the coronavirus, I believe Comtech’s long-term fundamentals remain excellent given its innovative and diversified product portfolio and its talented employees. I am grateful that our 911 business has been able to support first responders and healthcare providers across the United States as they are the true heroes in this crisis. If this event has taught us anything, it is the importance of reliable, quality, advanced communications equipment and infrastructure to the continuity of business operations ꟷ an area that Comtech has excelled in for decades.”