Israeli VSAT specialist Gilat Satellite Networks has launched a US$35.3m rights offering to fund its strategic shift towards the HTS and inflight connectivity markets. The move comes after the group reorganised last year following a weaker than expected performance in its defence business.
Israeli VSAT specialist Gilat Satellite Networks (NASDAQ:GILT) has launched a US$35.3m rights offering to fund its strategic shift towards the HTS and inflight connectivity markets.
For every nine ordinary shares owned, holders have been offered one non-transferable subscription right enabling them to buy two ordinary shares for US$7.16, reflecting a US$3.58 per share subscription price.
The shares were trading at around US$3.65 as SatelliteFinance went to press, after closing at US$3.87 the day before the announcement.
Gilat chairman and interim CEO Dov Baharav said the offering would increase the group’s liquidity enabling to take advantage of the growing demand it is seeing for its HTS and inflight connectivity solutions.
“In conjunction with our strategy of offering our customers end-to-end solutions, we expect that some of these larger scale projects will require up front capital investments,” Baharav said.
“Furthermore, we see additional potential in providing services to rural areas, projects which may also be characterised by large up front capital investments.”
Gilat’s controlling shareholder FIMI intends to exercise its subscription rights in full, and has said it may also exercise over-subscription rights. It does not intend to equal or exceed 45% of the group’s voting rights. The FIMI partnerships currently own about 33.8% of Gilat’s outstanding ordinary shares.
The rights offering expires on 21 March 2016.
Baharav took on the additional role of interim CEO in March last year after Erez Antebi stepped down from the helm following more than 20 years at the VSAT specialist.
Antebi’s departure came amid a restructuring aimed at positioning the company towards high growth markets following a weaker than expected performance in its defence business.
One of the areas Gilat is targeting is China, where it has partnered with a number of companies and is supplying VSAT terminals for the first Ka band HTS multi-spot beam satellite ChinaSat-16.
Posting Q4 results on 17 February 2016, Gilat said revenues for the three months to 31 December 2015 reached US$67.7m, compared with US$40.3m the previous quarter and US$73.1m in the comparable period of 2014.
Revenue for 2015 declined to US$197.5m, compared with US$235.1m for 2014.
Gilat posted US$11.1m in EBITDA for Q4 2015, compared with a loss of US$3.4m in the previous quarter and an EBITDA of US$10.4m for the comparable period of 2014.
EBITDA for 2015 declined to US$5.3m compared with US$23.4m for 2014.
American Stock Transfer & Trust Company is the US subscription agent for the rights offering, while The Nominee Company of Discount Bank is the subscription agent in Israel.
D.F. King & Co. Inc is information agent.
