Comtech Sets the Record Straight Regarding Outerbridge’s Continued Misleading Claims
Outerbridge’s latest claims do not stand up to the facts; Exposes hedge fund’s misleading statements, material omissions, unqualified director nominees, and true agenda
Comtech’s Board has driven strong performance, transformative acquisition strategy, thoughtful Board refreshment, and access to critical new growth capital
In response to Outerbridge’s continued false and misleading statements,
Outerbridge greatly misrepresents the facts of Comtech’s performance, revealing an ongoing inability to understand Comtech’s business. The
November 22, 2021“analysis” that Outerbridge filed with the SECuses a peer set on which no informed shareholder or analyst would rely. Outerbridge cites companies whose market capitalizations, businesses, end markets, and financial profiles differ so radically from Comtechas to render comparisons at best irrelevant, and at worst self-serving and misleading. Further, this analysis cherry picks dates so as to completely ignore the announcements of major new contract wins and governance enhancements that were well underway before Comtechever heard of Outerbridge.
- Outerbridge glosses over its deceptive revolving door of Board candidates. In criticizing Comtech’s vetting process, Outerbridge conveniently omits that it failed to permit its initial nominees to follow Comtech’s standard evaluation process; then changed its entire director nominee slate; and then again refused to permit its nominees to participate in standard Board-selection due diligence.
Outerbridge’s director nominees are unfit to serve on Comtech’s Board.
Wendi Carpenteroffers no industry, accounting, or M&A expertise. Ms. Carpentersits on the Board of only one company, SkyWater Technology, whose share price fell 36% following disappointing third quarter earnings in which the company reported a net loss and its principal accounting officer resigned without explanation. Comtechalso discovered material omissions from Ms. Carpenter’s resume that mask a history of poor oversight, including chairing a now defunct credit card processing company and forming three small businesses that have been administratively dissolved due to failure to file required annual reports and registrations. Sidney Fuchscurrently serves as Chairman of the Board of Eutelsat North America, a major competitor to many of Comtech’s largest customers, creating a material conflict of interest that would significantly damage key customer relationships and negatively impact prospective business opportunities. His industry background is in services – not products or software – and he also possesses no accounting or audit experience. Mr. Fuchsresigned his only position as CEO and director of a public company, ATS Corporation, just a few days after assuming the CEO role.
- Outerbridge appears to have no value creation plan beyond writing public letters riddled with inaccuracies and misleading, unsubstantiated claims; wasting our Board’s time with an ever-changing selection of director candidates; and actively trading in and out of Comtech’s stock over the past several months while holding a substantial portion of their “ownership” position in short-dated options.
In stark contrast to Outerbridge,
Delivered strong shareholder returns: Through
October 29, 2021, Comtechhas delivered five-year total shareholder returns of 126.7%, outperforming the S&P 600 which returned 99.7%, the NASDAQ Telecommunications Index which returned 87.5%, and the appropriate peer set who returned 36.7%. This five-year period includes major announcements made by Comtech: (i) the fiscal 2021 refreshment of the Board including the appointment of our second female director; (ii) Comtech’s plan to declassify the Board; (iii) the impact of COVID-19 on Comtech’s full fiscal 2021 results and fiscal 2022 guidance; (iv) the announcement of the completion of the Board’s multi-year CEO succession plan; and (v) major contract award announcements related to NG-911 contracts and a new multi-year contract for our next-generation broadband satellite technology that can result in potential future orders aggregating hundreds of millions of dollars. Despite the indisputable impact of COVID-19 disruptions on its business, Comtech’s share price has also rebounded 84% from pandemic lows.1
Executed a transformative acquisition strategy that is producing results: Comtech’s 2016 acquisition of
TeleCommunication Systems, Inc.facilitated entry into the 911 public safety market, provided access to blue chip customers, and generated meaningful recurring revenues through multi-year contracts. In the same breath that they refer to Comtech’s 911 public safety business as its “crown jewel,” they criticize the disciplined and thoughtful M&A strategy that built this business. Outerbridge cannot have it both ways.
Refreshed its Board with highly capable directors: Since 2020, Comtech’s Board has accelerated a deliberate director refreshment process that was initiated in 2015, resulting in the appointment of four qualified new directors, the planned retirement of three longstanding directors, and declassification as part of its commitment to strong governance. Comtech’s two directors standing for election demonstrate the strong mix of skills, experience, and diverse perspectives on the Board. Larry Waldman’s 35-plus years of experience in auditing and internal controls provide our Board critical expertise in complex global accounting.
Judy Chamberswas appointed to our Board in August 2021following a multi-month evaluation process, adding extensive experience interfacing with regulatory authorities as it relates to major infrastructure projects and addressing the interests and concerns of institutional investors.
Secured new capital to fund next phase of growth and empowered the right leader: New CEO
Mike Porcelainhas the operational and executional expertise necessary to move Comtechforward, as evidenced by his ability to drive key, long-term contract wins and secure a $100 millioninvestment following months of discussions. The proceeds of this investment provide the capital necessary to fund Comtech’s next phase of growth, including additional capital investments to service new next-generation 911 contracts and a new large satellite technology contract as well as attractive M&A opportunities. Leading financial and legal advisors thoroughly assessed the terms of this investment, which provide for an adjustment to the conversion price representing a 7% premium. Further, the investment agreement contains no voting obligations with respect to the election of directors.
YOUR VOTE IS VERY IMPORTANT!
To ensure your shares are represented, please follow the easy instructions on the BLUE proxy card to vote by telephone, by internet, or by signing, dating and returning the BLUE proxy card in the postage-paid envelope provided. If you received this letter by email, you may also vote by pressing the BLUE “VOTE NOW” button in the accompanying email. Please simply disregard any White proxy card you may receive from Outerbridge.
If you have any questions or require any assistance with voting your shares, please call Comtech’s proxy solicitor,
Toll-Free: (877) 750-8198 (from the
Or +1 (412) 232-3651 (from other locations)
Comtech’s definitive proxy materials and other materials regarding the Board’s recommendation for the Fiscal 2021 Annual Meeting of Stockholders can be found at www.comtechcreates.com.
Certain information in this press release contains statements that are forward-looking in nature and involve certain significant risks and uncertainties, including about our business trajectory, future revenue and sales, acquisition strategy, management and governance changes, and growth. Actual results could differ materially from such forward-looking information. Risks and uncertainties that could impact these forward-looking statements include: the possibility that the expected synergies and benefits from recent acquisitions will not be fully realized, or will not be realized within the anticipated time periods; the risk that the acquired businesses will not be integrated with the Company successfully; the possibility of disruption from recent acquisitions, making it more difficult to maintain business and operational relationships or retain key personnel; the risk that the Company will be unsuccessful in implementing a tactical shift in its Government Solutions segment away from bidding on large commodity service contracts and toward pursuing contracts for its niche products with higher margins; the nature and timing of receipt of, and the Company's performance on, new or existing orders that can cause significant fluctuations in net sales and operating results; the timing and funding of government contracts; adjustments to gross profits on long-term contracts; risks associated with international sales; rapid technological change; evolving industry standards; new product announcements and enhancements; changing customer demands and or procurement strategies; changes in prevailing economic and political conditions; changes in the price of oil in global markets; changes in foreign currency exchange rates; risks associated with the Company's legal proceedings, customer claims for indemnification, and other similar matters; risks associated with the Company’s obligations under its Credit Facility; risks associated with the Company's large contracts; risks associated with the COVID-19 pandemic and related supply chain disruptions; and other factors described in this and the Company's other filings with the
Additional Information and Where to Find It
Participants in the Solicitation
The Company, its directors, and certain of its executive officers are, and certain other members of management and employees of the Company may be deemed, “participants” in the solicitation of proxies from stockholders in connection with the matters to be considered at the 2021 Annual Meeting. Information regarding the direct and indirect interests, by security holdings or otherwise, in the Company of the persons who are or may be, under the rules of the
1 Source: Bloomberg market data as of
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