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COMTECH TELECOMMUNICATIONS CORP /DE/
0000023197
2024-01-22
2024-01-22
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
January 22, 2024 |
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0-7928 |
Date of Report |
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Commission File Number |
(Date of earliest event reported) |
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(Exact name of registrant as specified in its charter)
Delaware |
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11-2139466 |
(State or other jurisdiction of |
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(I.R.S. Employer Identification Number) |
incorporation or organization) |
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68 South Service
Road, Suite 230 |
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Melville,
New York 11747 |
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(Address of Principal Executive Offices) (Zip Code) |
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(631)
962-7000 |
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(Registrant’s telephone
number, including area code) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title
of each class |
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Trading
Symbol(s) |
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Name
of exchange
on
which registered |
Common Stock, par value $0.10 per share |
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CMTL |
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Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an
emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
COMTECH
TELECOMMUNICATIONS CORP /DE/
On January 22, 2024, Comtech Telecommunications
Corp. (“Comtech” or the “Company”) issued a press release announcing that funds affiliated with White Hat Capital
Partners LP and funds affiliated with Magnetar have agreed to purchase $45 million in the aggregate of a new series of convertible
preferred stock of the Company, the Series B Convertible Preferred Stock, par value $0.10 per share, titled the “Series B Convertible
Preferred Stock” (“Series B Convertible Preferred Stock”). In connection with the investment, the Company exchanged
all outstanding shares of the Company’s Series A-1 Convertible Preferred Stock, par value $0.10 per share, titled the “Series
A-1 Convertible Preferred Stock” for Series B Convertible Preferred Stock. A copy of the press release is attached hereto as Exhibit
99.1 and is incorporated herein by reference. White Hat Capital Partners LP is affiliated with Mark Quinlan, a member of the Company’s
Board of Directors.
Forward-Looking Statements
Certain statements contained herein are
forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the
assumptions prove incorrect, the Company’s results may differ materially from those expressed or implied by such
forward-looking statements. All statements other than statements of historical fact could be deemed forward-looking, including, but
not limited to, statements about the investment described herein and achievement of its potential benefits and the intended use of
proceeds. Risks and uncertainties that could impact these forward-looking statements include: the Company’s ability to access
capital and liquidity so that it is able to continue as a going concern; the possibility that the expected synergies and benefits
from acquisitions will not be fully realized, or will not be realized within the anticipated time periods; the risk that the
acquired businesses will not be integrated successfully; the possibility of disruption from acquisitions or dispositions, making it
more difficult to maintain business and operational relationships or retain key personnel; the risk that the Company will be
unsuccessful in implementing its “One Comtech” transformation and integration of individual businesses into two
segments; the risk that the Company will be unsuccessful in implementing a tactical shift in its Satellite and Space Communications
segment away from bidding on large commodity service contracts and toward pursuing contracts for its niche products and solutions
with higher margins; the nature and timing of the Company’s receipt of, and the Company’s performance on, new or
existing orders that can cause significant fluctuations in net sales and operating results; the timing and funding of government
contracts; adjustments to gross profits on long-term contracts; risks associated with international sales; rapid technological
change; evolving industry standards; new product announcements and enhancements; changing customer demands and or procurement
strategies; changes in prevailing economic and political conditions, including as a result of Russia’s military incursion into
Ukraine and the Israel-Hamas war; changes in the price of oil in global markets; changes in prevailing interest rates and foreign
currency exchange rates; risks associated with the Company’s legal proceedings, customer claims for indemnification, and other
similar matters; risks associated with the Company’s obligations under its credit facility and the Company’s ability to
refinance its credit facility; risks associated with the Company’s large contracts; risks associated with supply chain
disruptions; and other factors described in this and the Company’s other filings with the Securities and Exchange Commission.
The Company assumes no obligation and does not intend to update these forward-looking statements or to conform these statements to
actual results or to changes in our expectations.
Item 9.01. |
Financial Statements and Exhibits. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: January 22, 2024
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COMTECH TELECOMMUNICATIONS CORP. |
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By: |
/s/ Michael A. Bondi
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Name: |
Michael A. Bondi |
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Title: |
Chief Financial Officer |
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EXHIBIT 99.1
Comtech Announces $45 Million Strategic
Investment and Exchange of Convertible Preferred Stock
Investment Enhances Comtech’s Financial
Flexibility and Supports Its Strategic Initiatives in Satellite Ground Station Infrastructure and Next-Generation Terrestrial and Wireless
Solutions
MELVILLE, N.Y. -- (BUSINESS WIRE) -- January
22, 2024 -- Comtech Telecommunications Corp. (NASDAQ: CMTL) (“Comtech” or the “Company”), a leading global technology
company providing terrestrial and wireless network solutions, next-generation 911 emergency services, satellite and space communications
technologies, and cloud native capabilities, today announced a $45.0 million investment by current shareholders White Hat Capital Partners
LP (“White Hat”), an investment firm focused on sustainable value creation in technology companies serving mission-critical
applications, and funds affiliated with Magnetar, a leading alternative investment manager with over $14 billion of assets under management.
In connection with the investment, the Company exchanged all outstanding shares of Comtech’s existing convertible preferred stock
for a new series of convertible preferred stock.
This strategic investment enhances Comtech’s
financial flexibility and strengthens the Company’s ability to capitalize on its recent large contract awards and growing customer
demand for its satellite communications technologies and next-generation terrestrial and wireless solutions. Comtech expects to apply
the proceeds of this investment across a range of initiatives which not only support near-term working capital needs and general corporate
purposes, including the repayment of certain outstanding indebtedness, but also its growth prospects. The issuance of the new series of
convertible preferred stock demonstrates the continued commitment of White Hat and Magnetar, and is an important step towards the completion
of the Company’s previously announced process to refinance its existing Credit Facility and further increase its financial and operational
strength.
Mark Quinlan, who currently serves as an appointee
of White Hat and Magnetar on the Company’s Board of Directors, will retain his position on the Board. Mr. Quinlan is White
Hat’s Co-Founder and Managing Partner and has more than 20 years of experience in the technology sector. He has provided valuable
insight and experience to the Board of Directors since January 2022.
“We are grateful for this investment
and endorsement of our strategy and team by two of our existing long-term shareholders,” said Comtech’s Chairman and CEO,
Ken Peterman. “Magnetar and White Hat understand our Company, our end markets, and the potential of our One Comtech vision. With
White Hat’s investment experience within the technology sector and Magnetar’s breadth of investment experience in both private
and public markets and across asset classes and capital structures, we value their continued support and are excited to strengthen our
relationship with them at this key inflection point for the Company.”
“Under CEO Ken Peterman’s leadership,
the entire Comtech team has made incredible progress on its One Comtech transformation,” said Mr. Quinlan. “We recognize Comtech’s
potential and believe this investment further supports the Company’s commitment to developing and delivering mission-critical solutions
for its customers.”
Summary of Investment Terms
White Hat and Magnetar purchased $45.0 million
of a new series of convertible preferred stock and exchanged all outstanding shares of Comtech’s existing convertible preferred
stock for shares of the new series of convertible preferred stock. The preferred stock will be convertible into shares of Comtech common
stock at a conversion price of $7.99 per share; carries a 9.00% dividend, payable in kind, or a 7.75% dividend, payable in cash, at Comtech’s
election; and contains an optional redemption date of October 31, 2028. Further details will be included in the Company’s Current
Report on Form 8-K to be filed with the Securities and Exchange Commission. That report will describe the investment in additional detail,
including exhibits with copies of associated transaction documentation.
Paul, Weiss, Rifkind, Wharton & Garrison
LLP is serving as legal advisor to Comtech and Sidley Austin LLP is serving as legal advisor to the Special Committee of the Board of
Directors of Comtech. Willkie Farr & Gallagher LLP is serving as legal advisor to Magnetar and Schulte Roth + Zabel LLP is serving
as legal advisor to White Hat.
About Comtech
Comtech Telecommunications
Corp. is a leading global technology company providing terrestrial and wireless network solutions, next-generation 9-1-1 emergency services,
satellite and space communications technologies, and cloud native capabilities to commercial and government customers around the world.
Comtech’s unique culture of innovation and employee empowerment unleashes a relentless passion for customer success. With multiple
facilities located in technology corridors throughout the United States and around the world, Comtech leverages its global presence, technology
leadership, and decades of experience to create the world’s most innovative communications solutions. For more information, please
visit www.comtech.com.
Forward-Looking Statements
This press release contains statements that
are forward-looking in nature and involve certain significant risks and uncertainties, including with respect to the offering of securities,
the intended use of proceeds and our current expectations, initiatives, strategies or future plans. No assurance can be given that the
transaction will be completed, or that the proceeds from the offering will be used as indicated. Forward-looking statements are subject
to numerous conditions, risks, and uncertainties, many of which are beyond the control of the Company, including those identified in the
Company’s filings with the Securities and Exchange Commission. Forward-looking statements are also based on assumptions that may
not be realized and involve risks and uncertainties that could cause actual results or other events to differ materially from the expectations
and beliefs contained herein. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties
described in Securities and Exchange Commission filings. The Company undertakes no obligation to release publicly any updates or revisions
to any forward-looking statements contained herein except as required by law.
PCMTL
###
Contacts
Investor Relations
Maria Ceriello
Investors@comtech.com
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