Benzinga | Oct 25, 2021 01:42PM EDT

Comtech Comments On Letter From Shareholder

Comtech Telecommunications Corp. (NASDAQ:CMTL), a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies, today confirmed receipt of a letter from Outerbridge Capital Management LLC and has issued the following statements:

Comtech maintains regular dialogue with all investors and values their perspectives. Since June 2021, our Board and management team have attempted to engage in constructive dialogue with Outerbridge. As such, we are disappointed by Outerbridge's inaccurate and highly misleading comments regarding our recently announced $100 million investment from current shareholder White Hat Capital Partners, LP and Magnetar Capital LLC.

This investment meaningfully enhances our ability to execute our strategic plan for creating long-term shareholder value, as our business has increasingly required significant capital in order to pursue growing market opportunities. While Outerbridge has oversimplified Comtech's ability to rely on its $300 million revolving loan facility and materially overstated both the current size and available borrowing capacity under the credit facility, the fact of the matter is that this investment more than doubles our accessible capital to achieve our strategic objectives.

Comtech's strategic plan has already delivered strong results, including:

* Shareholder returns1 of 134.5% over the past five years2, meaningfully outperforming peers, the S&P 500, and the Nasdaq Telecommunications Index, regardless of the impact that COVID-19 had on our business3.

* Strategic multi-year next-generation 911 contracts totaling over $200 million from states such as Pennsylvania, Arizona, and Iowa won during FY2021.

* A pivotal new customer contract that has the strong potential to generate several hundreds of millions of dollars of incremental revenue through customization of our next-generation broadband satellite technology for use with thousands of Lower Earth Orbit ("LEO") satellites reportedly being launched over the next several years.

* Recognition from Frost & Sullivan and Northern Sky Research for both our next-generation 911 solutions and our market leadership position in the growing satellite cellular backhaul market.

The proceeds of the investment will be applied to a range of initiatives to further accelerate growth and profitability, including, but not limited to:

* Completing the build out of Comtech's new, state-of-the-art technology centers and advanced manufacturing capabilities to better allow the Company to capture value from the increasing demand for satellite ground station infrastructure and next-generation broadband technology.

* Continuing to pursue the Company's robust pipeline of opportunities to capitalize on the ongoing 911 upgrade cycle across the United States.

* Executing on a disciplined strategy of acquiring and integrating complementary technologies and capabilities, with a focus on creating shareholder value.

* Additional flexibility to optimize capital allocation and our return program.

In addition, in connection with this investment from White Hat and Magnetar, we announced that Mark Quinlan, who brings more than 20 years of experience in the technology space, will be joining the Board in 2022. The addition of Mr. Quinlan complements the recent addition of Judy Chambers to our Board and will increase the Board's size to seven directors, of which five will be independent.

Contrary to Outerbridge's insinuation, in line with Comtech's commitment to sound corporate governance, the investment agreement with White Hat and Magnetar does not contain any voting commitment for the Company's upcoming 2021 Annual Meeting. Additionally, to correct another false statement from Outerbridge, the holders of common shares actually vote side-by-side with the holders of preferred shares, as a single class, on the election of the director candidate nominated by holders of preferred shares.

We remain open to constructive dialogue with Outerbridge even as we move forward to create value for all shareholders.