Comtech Telecommunications Corp. (CMTL, Financials) announced Thursday a plan to become a satellite and space communications company. Under this strategy, Comtech's Board of Directors is looking at strategic options for its Terrestrial & Wireless Networks division, maybe including a divestment. The firm claimed in a release that the proceeds from this possible action would be utilized to streamline its capital structure and enhance its balance sheet.
To keep liquidity and support its change, Comtech has modified its current credit facility and obtained a $25 million subordinated unsecured term loan, the company said. Comtech's statement indicates that the term loan was set up with holders of convertible preferred shares.
Comtech also plans to close its subsidiary operations in the United Kingdom, which should result in yearly savings of $10 million after restructuring, the firm said. Comtech said that its portfolio evaluation guided this choice to concentrate more especially on satellite and space communications.
Comtech's satellite and space communications division services allied foreign governments, defense contractors, and U.S. government agencies. Based on the announcement, the company anticipates ongoing demand for this market resulting from worldwide defense spending and modernization initiatives.
The company observed that its strategic review for the Terrestrial & Wireless Networks segment is continuous without guaranteeing a transaction.
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