Gilat’s Top Creditor Converts $70.4-M Loan into Equity

PETAH TIKVA, Israel, Sept. 28, 2006/Satnews Daily/ — Gilat Satellite Networks Ltd., (Nasdaq:GILT) announced on Wednesday that its top creditor, York Capital Management,  has exercised its option to convert all of its $70.4 million loan plus accrued interest of about $1 million into approximately 10.6 million ordinary shares of the company.

After the conversion, Gilat said its outstanding shares will increase from roughly 23.2 million shares to approximately 33.8 million shares. York will own a total of approximately 11.1 million shares, which include approximately 10.6 million shares from the loan conversion and approximately 0.5 million shares purchased on the open market in May 2006.

Following the transaction, York will own approximately 33 percent of Gilat’s outstanding shares.

Following this conversion Gilat said it will have reduced its total debt balance from $125 million on September 30, 2005 to approximately $46 million as of September 27, 2006. As a result, Gilat's shareholders’ equity will increase by $68.1 million. In addition, Gilat said its future annual interest expense on its outstanding debt will decline by approximately $6 million based on the current LIBOR interest rate.

Amiram Levinberg, chairman and CEO of Gilat, said York’s decision to shift its position from a debt holder to a shareholder is a strong vote of confidence in Gilat and significantly strengthens Gilat’s balance sheet.”