Comtech Provides Business Update
Monday, July 13, 2020 | Comments

Comtech Telecommunications provided a business update related to its fourth quarter fiscal 2020 targets and its pending lawsuit against Gilat Satellite Networks.

Comtech remains an essential business as defined by the U.S. government. Despite the reported increase of coronavirus infections around the world and ongoing travel limitations, Comtech’s business is rebounding, and Comtech expects that its fiscal 2020 fourth quarter consolidated net sales will be meaningfully better than the results it achieved during the third fiscal quarter. Net income for quarter four will be impacted by $4.7 million of acquisition costs and merger and acquisition (M&A) legal expenses.

“Our customers appear to be adjusting to new ways of doing business and our pipeline of opportunities looks like it is growing,” said Comtech Chairman and CEO Fred Kornberg. “We are very fortunate to have a diverse customer base and a broad range of products and services, many of which like our 9-1-1 solutions for public-safety agencies and U.S. government solutions, address critical communications needs.”

Comtech also amended its complaint in the pending lawsuit against Gilat, adding to the complaint a request for a declaratory judgment that Gilat suffered a material adverse effect due in significant part (but not entirely) to the enormous damage the COVID-19 pandemic has done to the airline industry. Gilat is disproportionately dependent on the airline industry compared with its peers and other companies in the industries in which it competes, Comtech said. As a result, the amended complaint alleges that Comtech is not required to close on the acquisition of Gilat.

Comtech agreed to buy Gilat in January.

The amended complaint retains Comtech’s earlier request for a declaratory judgment that certain actions, including unilaterally interfering in Comtech’s application for Russian regulatory approval and/or disposing of and/or restructuring Gilat’s business operations in Russia, if taken by Gilat, would breach Gilat’s obligations under the merger agreement.

Comtech believes that it remains in compliance with all of its obligations under the merger agreement with Gilat. Further, without waiver of its rights as set forth in the amended complaint, unless and until its merger agreement with Gilat is terminated, Comtech intends to continue to comply fully with its obligations under the merger agreement, including all obligations with respect to seeking Russian regulatory approval.

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