Entrenchment and conflicts of interest plague
current Ceragon Board
Voting expected to begin soon, giving Ceragon
shareholders the chance to elect new, highly qualified independent
directors to ensure Ceragon pursues opportunities to create
value
AUSTIN,
Texas, July 18, 2022 /PRNewswire/ -- Aviat
Networks, Inc. (NASDAQ: AVNW) ("Aviat"), the leading expert in
wireless transport solutions, today sent another letter to
shareholders of Ceragon Networks Ltd. (NASDAQ: CRNT) ("Ceragon" or
"the Company"), in connection with the upcoming extraordinary
meeting of shareholders.
Dear fellow Ceragon shareholders:
We have written to you previously regarding the destruction of
shareholder value brought about by Ceragon's current management and
Board. Most recently, Ceragon has rebuffed an opportunity to create
value by refusing to engage with Aviat to negotiate a mutually
beneficial transaction. While the Board continues to delay setting
a date for the extraordinary shareholder meeting, we expect voting
will begin shortly and want to provide more information regarding
the opportunity you will have to effect change at Ceragon. We have
proposed to increase the size of the Ceragon Board to nine, remove
three current directors, and elect five highly qualified,
independent directors who will be better able to represent the
interests of all Ceragon shareholders and seriously consider all
opportunities to create value.
Change at Ceragon is much needed and long overdue.
Ceragon's entrenched Board members are not the right people to
determine the future of your Company. The three directors Aviat
seeks to replace – Ira Palti,
Yael Langer, and David Ripstein – have close ties to Ceragon and
to other companies founded, owned, or formerly led by Ceragon
Chairman Zohar Zisapel, and as a result, lack the necessary
independence to make decisions in the best interests of all Ceragon
shareholders. We believe their presence deters transparent
governance, frustrates value creation, and makes a mockery of the
concept of an independent Board.
- Ira Palti served as
Ceragon CEO from 2005 to 2021, during which time he oversaw the
destruction of shareholder value. Mr. Palti is the architect of
Ceragon's failed chip strategy, and has wedded the Company to
seeing his strategy through. From his position on the Board, he has
the ability to impede any efforts that current management could
make to abandon his own failed strategy and pursue a new one.
- Yael Langer is General
Counsel at RAD Data Communications, a company founded by Mr.
Zisapel and led by his brother, Yehuda Zisapel, and has served on
the Ceragon Board since 2000, during which time Ceragon's stock
price has fallen approximately by 80%. With her own fortune tied so
closely to Mr. Zisapel, we have little confidence that she would
put the interests of Ceragon shareholders above the interests of
Mr. Zisapel.
- David Ripstein spent nine
years as CEO of RADCOM, another company founded by Mr. Zisapel and
a part of the RAD Group (of which Ceragon is also a member). His
loyalties, too, are more aligned with Mr. Zisapel than with
ordinary Ceragon shareholders.
The Ceragon Board (including Mr. Palti, Ms. Langer and Mr.
Ripstein) and management continue to ask you to patiently wait for
a turnaround at Ceragon, but Mr. Zisapel himself seems to lack this
patience. Look at what he does, not at what he says:
- In February 2021, Mr. Zisapel
sold approximately one-third of his Ceragon shares, when the stock
was trading at over $5.00 per share,
well above where it has traded since. By selling a substantial
portion of his shares, Mr. Zisapel has demonstrated his lack of
confidence in the Company's current strategy and management's
ability to protect the value of his investment. In fact, the
company has not reported any positive free cash flow for investors
in its quarterly earnings and has generated cumulative negative
free cash flow of $29 million since
Mr. Zisapel's sale. Actions speak louder than words, and Mr.
Zisapel's actions contradict the narrative he and his Board cronies
continue to push shareholders to accept.
As Ceragon shareholders, why should we wait patiently for
Ceragon's strategy to generate value, when the Company's own
Chairman has made efforts to minimize his financial exposure to the
failure of Ceragon's standalone strategy?
In contrast to these three current Ceragon directors, Aviat's
five nominees have the expertise and independence needed to turn
Ceragon around. All five nominees – Michelle R. Clayman, Paul Delson, Jonathan F.
Foster, Dennis Sadlowski, and
Craig Weinstock – are seasoned
leaders in their respective fields and have extensive experience
leading and advising companies across sectors (including
technology, financial services, industrials, manufacturing, energy,
and hospitality) and situations (including corporate finance,
M&A, restructurings, financing transactions, and more). You can
read more about the qualifications of the nominees in our
June 27, 2022 press release.
In addition to bringing strong operational and financial
expertise to the Company, Aviat Networks is confident these
directors will carefully evaluate our proposal to acquire Ceragon,
which would deliver immediate and certain value – at a premium – to
shareholders, and recognize that we offer a significant opportunity
to build a leading global wireless transport specialist that is
best positioned for future growth and innovation.
Ceragon shareholders have waited far too long for the Company to
create meaningful value for shareholders. The time has come to take
action. Shareholders should receive information about how to vote
their shares soon. When you do, please immediately complete and
return Aviat's GOLD proxy card, voting FOR our proposals to expand
the Board, remove Mr. Zisapel's cronies from the Board, and elect
all five of the Aviat nominees, who will bring fresh unbiased
and objective perspectives to Ceragon, seriously consider all value
creation opportunities, and commit to correcting Ceragon's downward
trajectory.
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 and Ceragon's actions in connection
therewith. 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
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SOURCE Aviat Networks, Inc.