Some Encouraging News

Mixed Quarterly Results, Many Questions Remain

A CEO Change

A Key Extension

Joe Gomes

Virtual & In-person Roadshows / Conferences

Channelchek Premium. Access more at no cost. 

The site "channelcheck" is opened on the phone

Join the Channelchek Investor Community. Your name, email, zip, and investor type is all it takes to open the door to research reports, favorites tracking, and virtual and in-person roadshows / conferences. Even exclusive investment opps.

Take it to the next level. It doesn’t cost a penny.

Click “Log In” to agree to Channelchek.com <a href="#">Terms of Use</a> and acknowledge that Channelchek.com <a href="#">Privacy Policy</a> applies to you.

Welcome to the Channelchek Investor Community

Informed investors make more money. And it’s all about timing. Get it when it happens.

Inbox Intel from Channelchek.

Technology

Hardware

Comtech Telecommunications Corp.

Transaction Overview
 Existing shareholder White Hat Capital Partners and Magnetar Capital are investing $100 million into Comtech through the purchase of $100.0 million of convertible preferred stock, which will be convertible into shares of Comtech common stock at a conversion price of $24.50 per share, subject to potential adjustment to $26.00 per share based on the Company&#8217;s fiscal 2022 financial performance. The preferred stock carries a 6.5% dividend, which will be payable in kind or in cash at Comtech&#8217;s election. Until March 31, 2023, White Hat and Magnetar will have a one-time right to purchase up to an additional $25.0 million of convertible preferred stock, which will be convertible into shares of Comtech common stock at a conversion price of $32.00 per share.
It is our understanding the higher conversion price will come into effect if Comtech is able to hit the higher end of its fiscal 2022 guidance range (net sales of $580-$600 million and adjusted EBITDA of between $70-$76 million). The deal is expected to close before the end of this month.
Who Are White Hat and Magnetar? 
Founded in 2016, White Hat Capital Partners is a private equity firm based in New York, New York. The firm primarily invests in the public equity markets with a focus on small-cap technology companies. The firm seeks to invest in aerospace &amp; defense, industrial, healthcare, networking &amp; security, semiconductors, services, software as a service, and software sectors. According to the firm&#8217;s website, &#8220;We are long-term investors, with a mandate to constructively engage. Our goal is to strengthen the companies in our portfolio by making our resources available to them.&nbsp;We offer companies transformational capital and differentiated strategic insights, complemented by our deep network of relationships.&#8221;
White Hat makes concentrated, value-oriented investments in companies with differentiated technologies serving mission-critical applications. This would seem to go glove-in-hand with what Comtech does in its NG911 business, as well as its satellite ground station and troposcatter businesses, among others. White Hat focuses on companies with market values in the $100 million to $1.5 billion range, seeking to invest $10 million to $100 million in each opportunity.
 Founded in 2005 and with $13.8 billion of assets under management as of June 2021, Magnetar Capital&nbsp;is a hedge fund based in Evanston, Illinois that invests in fixed income, energy, quantitative and event-driven strategies. Magnetar participates in 3 different strategies: Systematic investing in which they focus on mutual funds and hedge funds, Alternative credit and fixed income where they focus on hedge funds and private equity, and Energy and Infrastructure which focuses on mutual funds, hedge funds, and private equity. The alternative credit and fixed income strategy invest in private equity that involves the transportation, real estate, energy, and consumer sectors, while also investing in corporate credit securities. In their energy and infrastructure strategy, they have a long-term investment time horizon and invest in companies in the energy sector with enterprise values between $500 million to $5 billion, in which these companies can use the funds for organic growth or M&amp;A. Lastly, their systematic investing strategy is a hedge fund that invests in three different types of companies, those that are &#8220;event-driven&#8221; including investing in companies undergoing mergers and insider selling of company stock, &#8220;relative value&#8221; with investing in companies that seem to be mispriced, and &#8220;quantitative&#8221; which invests in statistical anomalies including human behavioral biases and market structural constraints.
New Board Member
As part of the transaction, Comtech announced Mark Quinlan will be appointed to the Board in conjunction with the CEO succession plan. Mr. Quilan&#8217;s appointment will increase the Board to seven members, five of whom will be independent.
 Mr. Quinlan is a co-founder and Managing Partner of White Hat. Mr. Quinlan is a senior investment professional with more than 20 years of experience in the Technology sector. At White Hat, Mr. Quinlan has led the Firm&#8217;s investments in Comtech Telecommunications, Macom Technology Solutions, MiX Telematics and RigNet (now Viasat).
Prior to co-founding White Hat Capital Partners LP in 2016, Mr. Quinlan was Managing Director and Co-Head of the Global Technology Investment Banking Group at Stifel. In addition, he served as a Member of the Investment Banking Management Committee as well as the Fairness Committee. Mr. Quinlan joined Stifel in 2010 through its merger with Thomas Weisel Partners. Mr. Quinlan joined Thomas Weisel Partners in 2000 with a team from Merrill Lynch and was promoted to Partner in 2006. He joined Merrill Lynch in 1996 following two years with Brown Brothers Harriman &amp; Co.
During his investment banking career, Mr. Quinlan advised corporate boards across the technology sector on strategic acquisitions and related financings. He has counseled executives and Boards through a range of cross-border M&amp;A transactions involving counter-parties across Europe and Asia.

Comtech Telecommunications Corp. (CMTL)

What Does $100 Million Strategic Investment Mean?

Fundamental Analysis:

Rating: Log in to view

Some Encouraging News (CMTL)

Mixed Quarterly Results, Many Questions Remain (CMTL)

A CEO Change (CMTL)

A Key Extension (CMTL)

Inbox Intel from Channelchek.