Ceragon Shareholders Face a Crucial Decision:
Support the Current Board's Entrenched Directors and Failed
Strategy or Elect New Independent Directors to Help Create Value
for All Shareholders
AUSTIN,
Texas, Aug. 16, 2022 /PRNewswire/ -- Aviat
Networks, Inc. (NASDAQ: AVNW) ("Aviat"), the leading expert in
wireless transport solutions, today sent the following letter to
shareholders of Ceragon Networks Ltd. (NASDAQ: CRNT) ("Ceragon" or
the "Company") in connection with the Company's Extraordinary
General Meeting ("EGM") of shareholders, which will take place on
August 23, 2022.
Dear fellow Ceragon shareholders,
With Ceragon's Extraordinary General Meeting just days away,
shareholders face a challenge and an opportunity. The
challenge is a Board of Directors that continues to fail to
deliver value to shareholders through its operations and flawed
strategy AND by refusing to engage with Aviat to negotiate a
value-creating transaction. Under the guidance of the current
Ceragon Board, the Company has botched the rollout of its crucial
new chip, faced recurring operational challenges, burnt through
cash at an accelerating rate, and seen its stock price slide
further and further (until propped up by our proposal).
The opportunity is to change the makeup of the Ceragon
Board by removing three entrenched and conflicted directors and
electing five new directors, all independent and all focused solely
on creating value for shareholders. To seize this opportunity,
Ceragon shareholders need to act now by voting TODAY on the
GOLD proxy card FOR the removal of ALL THREE
Ceragon directors – Yael Langer,
Ira Palti and David Ripstein – and FOR the election of
ALL FIVE of Aviat's director nominees who will explore all
compelling options to increase shareholder value, including Aviat's
premium acquisition proposal.
We have long believed in the strategic and financial logic of
combining Aviat and Ceragon, as have industry analysts and many
Ceragon investors. For this reason, we have attempted for more than
a year to negotiate a mutually agreeable transaction with the
Company's Board and management team. Instead of engaging with us
to find the right path forward, the Board chose to take us on a
slow walk to nowhere, delaying for month after month, and setting
impossible and inappropriate conditions to even discuss a
transaction. The Board's refusal to engage left Aviat with no
choice but to make our proposal public, so you could see for
yourself the value proposition:
- Aviat's revised proposal offers Ceragon shareholders
$3.08 per share, consisting of
$2.80 per share in cash and
$0.28 in equity consideration, a
combination of cash and equity that balances immediate and
long-term value.
- Our revised proposal represents a substantial premium of 47% to
the closing price of Ceragon shares on June
27, 2022, of $2.09 (the last
close price prior to Aviat's first public offer) and a 64% premium
to Ceragon's 60-day volume-weighted average share price of
$1.88.
- The transaction would create significant synergy opportunities
and give the combined company the scale and reach needed to
innovate more, expand revenue opportunities, and enhance
addressable market capture. Through the equity portion of our
proposal, shareholders of both Ceragon and Aviat would be able to
benefit from the bright future of the combined entity.
Our preference would have been to take this proposal directly to
shareholders in the form of a tender offer, so that you could make
up your own mind about the future of your investment in Ceragon.
Unfortunately, under Israeli law, to complete a tender offer, 95%
of all shareholders must accept the tender offer and tender their
shares. We knew that it would be impossible to fulfill this
condition, given that Ceragon's Chairman, Zohar Zisapel, owns over
8% of Ceragon stock and is opposed to a combination with Aviat.
However, Israeli law does give us, as the holder of more than 5% of
Ceragon's shares, the right to call an EGM to remove and replace
directors.
In its August 8 report,
independent proxy advisory firm Institutional Shareholder Services
("ISS") recognized that the Ceragon Board has sat passively rather
than negotiate a deal or engage in detailed discussions. They
agreed with our concern regarding directors like Ira Palti and Yael
Langer, both closely linked to Mr. Zisapel, writing that
"investors may question to what extent they would challenge the
company's chairman/co-founder."1 Mr. Zisapel's share
ownership prevents us from pursuing a tender offer, and his control
of a majority of the Board through his network of outside
relationships with certain Ceragon directors prevents the Board
from making the right decisions. As a result, shareholders stand
to lose this premium offer if ALL FIVE of the Aviat nominees are
not elected. Furthermore, as ISS noted in its report, "lack of
clear progress" on Ceragon's strategy could, "send the stock lower
in the short term in the absence of a transaction." Ceragon
recently provided new five-year projections to defend its failing
strategy. Their aspirational guidance offers big numbers, but
little path (operationally or financially) to achieving them.
Shareholders can wait five years to see if these highly ambitious
targets can be met – especially in light of an endless chain of
operational and strategic setbacks and the Company's cash burn and
challenged balance sheet– or they can pursue immediate and
certain value today.
As shareholders, you have a choice: stay the course with an
entrenched Board locked into a failed strategy and watch further
value be destroyed, OR vote for Board change by electing ALL
FIVE of our highly-qualified nominees: Michelle R. Clayman, Paul Delson, Jonathan F.
Foster, Dennis Sadlowski, and
Craig Weinstock. Unlike the
directors we seek to remove, these nominees are independent from
Aviat, from Ceragon management, and perhaps most importantly, from
Mr. Zisapel. Each is prepared to honor their fiduciary
responsibility to maximize shareholder value and when elected, will
evaluate and oversee fairly not just our proposal to acquire
Ceragon but also any other path to creating value for all
shareholders.
The choice is yours, but time is running out. Your proxy
ballots must be received in advance of the August 23 EGM. Every vote counts, no matter how
few or how many shares you may own. If you have not yet voted,
please do so by returning the GOLD proxy card TODAY. If you have
voted and wish to change your vote, you can still submit your GOLD
proxy card. If you have any questions about how to vote, please
contact our proxy solicitor, Okapi Partners LLC, at
info@okapipartners.com, or by calling +1 (212) 297-0720 or toll
free at +1 (844) 202-7428. For further information, please visit
ValueforCeragon.com.
Sincerely,
Peter A. Smith
Aviat Networks
President and Chief Executive Officer
About Aviat Networks, Inc.
Aviat Networks,
Inc. is the leading expert in wireless transport solutions and
works to provide dependable products, services and support to its
customers. With more than one million systems sold into 170
countries worldwide, communications service providers and private
network operators including state/local government, utility,
federal government and defense organizations trust Aviat with their
critical applications. Coupled with a long history of microwave
innovations, Aviat provides a comprehensive suite of localized
professional and support services enabling customers to drastically
simplify both their networks and their lives. For more than 70
years, the experts at Aviat have delivered high-performance
products, simplified operations, and the best overall customer
experience. Aviat Networks is headquartered
in Austin, Texas. For more
information, visit www.aviatnetworks.com or connect
with Aviat
Networks on Twitter, Facebook and LinkedIn.
Forward-Looking Statements
The information contained
in this document includes forward-looking statements within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Such statements include,
without limitations, statements regarding the proposed transaction
between Aviat and Ceragon, the results of the requested
extraordinary general meeting of shareholders of Ceragon, Ceragon's
actions in connection therewith, and any potential related
litigation. All statements, trend analyses and other information
contained herein regarding the foregoing beliefs and expectations,
as well as about the markets for the services and products of Aviat
and trends in revenue, and other statements identified by the use
of forward-looking terminology, including, without limitation,
"anticipate," "believe," "plan," "estimate," "expect," "goal,"
"will," "see," "continue," "delivering," "view," and "intend," or
the negative of these terms or other similar expressions,
constitute forward-looking statements. Forward-looking statements
are neither historical facts nor assurances of future performance.
Instead, forward-looking statements are based on estimates
reflecting the current beliefs, expectations and assumptions of the
senior management of Aviat regarding the future of its business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions. Such
forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements.
Forward-looking statements should therefore be considered in light
of various important factors, including those set forth in this
document. Therefore, you should not rely on any of these
forward-looking statements. Important factors that could cause
actual results to differ materially from estimates or projections
contained in the forward-looking statements include the
following:
- the impact of COVID-19 on our business, operations and cash
flows;
- continued price and margin erosion as a result of increased
competition in the microwave transmission industry;
- our ability to realize the anticipated benefits of any proposed
or recent acquisitions, including our proposed transaction with
Ceragon, within the anticipated timeframe or at all, including the
risk that proposed or recent acquisitions will not be integrated
successfully;
- the results of the extraordinary general meeting of Ceragon's
shareholders;
- the impact of the volume, timing, and customer, product, and
geographic mix of our product orders;
- the timing of our receipt of payment for products or services
from our customers;
- our ability to meet projected new product development dates or
anticipated cost reductions of new products;
- our suppliers' inability to perform and deliver on time as a
result of their financial condition, component shortages, the
effects of COVID-19 or other supply chain constraints;
- the effects of inflation and the timing and extent of changes
in the prices and overall demand for and availability of our
inputs;
- customer acceptance of new products;
- the ability of our subcontractors to timely perform;
- weakness in the global economy affecting customer spending;
- retention of our key personnel;
- our ability to manage and maintain key customer
relationships;
- uncertain economic conditions in the telecommunications sector
combined with operator and supplier consolidation;
- our failure to protect our Intellectual property rights or
defend against Intellectual property infringement claims by
others;
- the results of our restructuring efforts;
- the ability to preserve and use our net operating loss
carryforwards;
- the effects of currency and interest rate risks;
- the effects of current and future government regulations,
including the effects of current restrictions on various commercial
and economic activities in response to the COVID-19 pandemic;
- general economic conditions, including uncertainty regarding
the timing, pace and extent of an economic recovery in the
United States and other countries where we conduct
business;
- the conduct of unethical business practices in developing
countries;
- the impact of political turmoil in countries where we have
significant business;
- the impact of tariffs, the adoption of trade restrictions
affecting our products or suppliers, a United
States withdrawal from or significant renegotiation of trade
agreements, the occurrence of trade wars, the closing of border
crossings, and other changes in trade regulations or relationships;
and
- Aviat's ability to implement our stock repurchase program or
the extent to which it enhances long-term stockholder value.
For more information regarding the risks and uncertainties for
Aviat's business, see "Risk Factors" in Aviat's Annual Report on
Form 10-K filed with the U.S. Securities and Exchange Commission
("SEC") on August 25, 2021, as well as other reports
filed by Aviat with the SEC from time to time. Aviat does not
undertake any obligation to update publicly any forward-looking
statement, whether written or oral, for any reason, except as
required by law, even as new information becomes available or other
events occur in the future.
Additional Information
This document does not
constitute an offer to sell or exchange, or the solicitation of an
offer to buy or exchange, any securities, nor will there be any
sale of securities in any states or jurisdictions in which such
offer or sale or exchange would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offering of securities will be made except by
means of a prospectus meeting the requirements of section 10 of the
Securities Act of 1933 or an exemption therefrom.
In connection with any transaction between Aviat and Ceragon
that involves the issuance of Aviat shares to the Ceragon
shareholders, Aviat will file a registration statement with the
SEC. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT, ANY
AMENDMENTS THERETO AND OTHER RELEVANT DOCUMENTS THAT MAY BE FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION. Investors will also be able to obtain copies of the
registration statement and other documents containing important
information about each of the companies once such documents are
filed with the SEC, without charge, at the SEC's web site
at www.sec.gov.
Investor Contacts
Aviat Networks
Andrew Fredrickson
+1-408-501-6214
andrew.fredrickson@aviatnet.com
Okapi Partners LLC
Bruce Goldfarb / Chuck Garske / Teresa
Huang
+1-212-297-0720
info@okapipartners.com
Media Contact
Abernathy MacGregor
Sydney Isaacs / Jeremy Jacobs
+1-212-371-5999
sri@abmac.com / jrj@abmac.com
1 Permission to use quotations from ISS was neither
sought nor obtained.
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SOURCE Aviat Networks, Inc.