Comtech's Former CEOs Nominate Full Slate of Candidates for Comtech Board of Directors

PR Newswire

MELVILLE, N.Y., Sept. 23, 2024

Issue Open Letter to Comtech Stockholders Advocating for an Independent Evaluation of Strategic Options for Comtech's 911 Public Safety Business, the Appointment of an External CEO & COO, and Other Initiatives to Enhance Stockholder Value

MELVILLE, N.Y., Sept. 23, 2024 /PRNewswire/ -- Fred Kornberg and Michael Porcelain, significant stockholders and former Chief Executive Officers (CEOs) of Comtech Telecommunications Corp. $(CMTL)$ ("Comtech" or the "Company", today issued an open letter to fellow Comtech stockholders.

Michael (Mike) Porcelain also announced that he has nominated a slate of eight highly qualified director candidates (the "Nominees") for election to the Comtech Board of Directors (the "Board") at the upcoming 2024 Annual Meeting of Stockholders. Collectively, the Nominees beneficially own approximately 7.6% of the outstanding shares of Comtech's common stock. If elected, the Nominees intend to pursue a thorough evaluation of strategic options for Comtech's 911 Public Safety business, the appointment of an external CEO & COO, and other initiatives aimed at enhancing long-term stockholder value.

The Nominees (listed in alphabetical order) comprise:

   -- Keith Hall - Founder and CEO of AssuredTek, Inc. ("AssuredTek") and 
      former Chairman of the board, CEO and President of Globecomm Systems Inc. 
      ("Globecomm") 
 
   -- Michael Hildebrandt - Senior Investment Professional at Freshford Capital 
      Management, LLC ("Freshford Capital") (a prior large institutional 
      stockholder of Comtech). 
 
   -- Fred Kornberg - Former Chairman of the Board, CEO, President and Senior 
      Technology Advisor to Comtech playing a pivotal role in driving Comtech's 
      historical success. 
 
   -- Michael Porcelain -- former CEO, President and CFO of Comtech, Board 
      Member and Audit Committee Chairman of Air Industries Group and President 
      and CEO of The Independent Adviser Corporation. 
 
   -- Robert Schassler - Member of the Board of Directors of Intrado Life & 
      Safety, former CEO of SCI Technology, Inc and former VP and General 
      Manager of Motorola Solutions Inc.'s ("Motorola") Government, Public 
      Safety, and Commercial Industry business. 
 
   -- Dr. Sanyogita Shamsunder - COO at NextNav, Inc., former Head of Globe 
      Network Edge of Google and former VP of Product Strategy and Technology 
      for Verizon. 
 
   -- Oleg Timoshenko - Founder and Operator of Feedback S.à r.l. and 
      previously Co-Founder of UHP Networks Inc. ("UHP") and Romantis Group. 
 
   -- Jay Whitehurst - Founder and Chairman of Couplify and previously 
      Comtech's Chief Strategy Officer and before that, President of Comtech's 
      Trusted Location product line and senior executive at Nortel Networks 

The full text of the letter dated September 23, 2024 follows:

Dear Fellow Stockholders:

Our decision to issue this public letter stems from our ongoing commitment to the success of Comtech. After much thought and diligence, we have taken this action to enhance value for all of Comtech's stakeholders, including, stockholders, employees, customers, and partners.

We are deeply familiar with the Comtech business and are confident that there are significant opportunities to enhance stockholder value through focused strategic actions under the leadership of a new board of directors.

We are fully committed to Comtech's future success and directly aligned with our fellow common stockholders. Accordingly, Mike has nominated a slate of eight highly qualified director candidates for election to the Board at the upcoming Fiscal 2024 Annual Meeting of Stockholders. The nominees bring a blend of knowledge, expertise, and relevant industry experience that we believe will be invaluable to Comtech's future. More detailed information about these director candidates is provided below and can be found in a Schedule 13D that was filed with the SEC on Friday, September 20, 2024.

Prior to the March 2024 termination of the CEO and other recent leadership changes, we (and others) reached out to the Board multiple times, offering help in various capacities. We ultimately met with several members of the Board. We offered our operational expertise aimed at increasing profitability, providing suggestions and advice on several topics, including offering to assist with refinancing efforts and in the search for a new CEO. We proposed several disclosures the company should include in its upcoming Form 10-K, particularly concerning all transactions with preferred stockholders, Credit Facility lenders, and related parties. At the suggestion of several stockholders and Wall Street analysts, Mike even offered to return as CEO without cash compensation, aligning his interests solely with common stockholders.

We ask the Board to follow the advice we have given them until new directors are elected.

Our Recommendations

In addition to the guidance we've shared privately with the existing Board, we believe the following are critical to Comtech's future success, and our Nominees are committed to executing them if elected to the Board:

   1. Leadership Change Disclosures: Disclose the specific details and 
      circumstances surrounding the March 2024 CEO termination for cause in the 
      upcoming Form 10-K to be filed with the SEC. Additionally, disclose any 
      internal control and governance changes implemented. 
 
   2. CEO & COO Search Process: Conduct a thorough and transparent search for 
      both an external CEO with relevant industry expertise, considering a wide 
      range of qualified candidates. Many years ago, the Interim CEO worked at 
      Comtech under our direction. We request to meet with the Interim CEO and 
      any current candidates to assess their qualifications and capabilities. 
      We believe a newly elected board should meet with the final list of 
      candidates and appoint the permanent CEO as well as a new COO, who just 
      resigned. 
 
   3. Evaluate Strategic Options: Assess the effectiveness and viability of 
      current strategic initiatives, including the "One Comtech" and "Evoke" 
      strategies. We recommend renaming the "Terrestrial & Wireless Networks" 
      segment to "911 Public Safety" to better highlight its value. As 
      discussed further below, we recommend an independent evaluation of 
      strategic options for Comtech's 911 Public Safety business. 
 
   4. Assess Capital Structure & Financing: Disclose in upcoming SEC filings 
      detailed information on recent financing activities, including details on 
      costs and the valuation of warrants issued both to the lenders and 
      preferred stockholders. Discuss the Board's oversight process and provide 
      third-party benchmarks for comparable transactions. 
 
   5. Enhance Core Business Units: Focus on key product lines and markets where 
      Comtech has established strengths, such as its satellite and troposcatter 
      product lines, to drive growth and increase profitability. 
 
   6. Optimize Operational Efficiency: Evaluate corporate costs and align 
      resources with strategic priorities to enhance operational efficiency and 
      support sustainable growth.  Assess the X/Y antenna product line and 
      evaluate potential partnership opportunities to continue to participate 
      in the LEO/MEO market. Develop and retain in-house talent rather than 
      engaging outside consultants. 
 
   7. Invest in Innovation: Renew focus on research and development to foster 
      genuine innovation within Comtech's product offerings. Such a focus is 
      crucial for maintaining a competitive advantage and fostering long-term 
      growth within the Company. 
 
   8. Establish Targeted Profit Centers: Reintroduce independent business units 
      for product lines focused on global commercial sales and government 
      clients to maximize market opportunities. Reinstating this strategy could 
      significantly enhance financial performance and we believe would be well 
      received by customers. 
 
   9. Ensure Consistency in SEC and Marketing Communications: Provide clear and 
      consistent disclosures to stockholders in public statements and 
      regulatory filings. 

Call to Evaluate Strategic Alternatives for the 911 Public Safety Business

During our communications with the Board, we have recommended exploring strategic alternatives for the 911 Public Safety business. We believe a carefully planned and well-executed sale process, similar to Rave Mobile Safety, Inc.'s $553.0 million sale to Motorola, could unlock substantial stockholder value. Proceeds from the sale could be used to eliminate all long-term debt and redeem the existing outstanding preferred stock.

We have consulted with a leading industry-specific investment banking firm and spoken with potential buyers. Based on our well-informed analysis, if a bona fide sale process were conducted, we believe that Comtech's 911 Public Safety business, which is significantly larger than Rave's, could achieve a sale price well in excess of $553.0 million.

We believe that such an evaluation process would benefit from the oversight of our Nominees once elected at the 2024 Annual Meeting of Stockholders.

TheFutureComtech.com

We are excited to announce that we have created a new website at TheFutureComtech.com, where you can send us your thoughts. Soon, you'll be able to stay-up to-date on what we have to say, and we will also make it easy to access important information including our SEC filings.

Stay tuned for the official launch -- we can't wait to share it with you.

Conclusion

We believe the recommendations we made to the Board and the election of the new director candidates listed at the end of this letter are important for positioning Comtech for long-term success and maximizing stockholder value.

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September 23, 2024 07:30 ET (11:30 GMT)