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Aviat Networks Issues Open Letter to Ceragon Networks Shareholders to Correct the Latest False Claims and Mischaracterizations from the Ceragon BoardAviat urges shareholders to vote on the GOLD proxy card for ALL FIVE Aviat nominees to elect directors who will support near- and long-term value creation at Ceragon AUSTIN, Texas, Aug. 11, 2022 /PRNewswire/ -- Aviat Networks, Inc. (NASDAQ: AVNW) ("Aviat"), the leading expert in wireless transport solutions,?today issued the following open letter to shareholders of Ceragon Networks Ltd. (NASDAQ: CRNT) ("Ceragon" or the "Company") to correct the latest false claims and mischaracterizations made by Ceragon's Board of Directors ("Board") in its August 8, 2022 letter to shareholders. Dear fellow Ceragon shareholders, Aviat has given the Board many opportunities to consider and negotiate a transaction that would provide shareholders like you immediate value at a significant premium. Rather than engage in fruitful discussion, the Board has delayed, deferred and attempted to distract you with a series of false and misleading arguments designed to disguise their persistent failure to deliver value. Earlier this week, the Board rejected Aviat's revised proposal to acquire Ceragon for $3.08 per share in cash and stock, in another letter that distorts the record and which is replete with false claims and mischaracterizations. We're writing to you today to once again set the record straight. THE PROPOSED TRANSACTION WOULD DELIVER SIGNIFICANT VALUE TO SHAREHOLDERS, IN EXCESS OF WHAT CERAGON CAN ACHIEVE THROUGH ITS CURRENT STRATEGY, AND WITH SUBSTANTIALLY LESS EXECUTION RISK.
Results like these are what Ceragon's Board expects you to believe is "strong business momentum." Since the beginning of 2019, Ceragon has incurred negative free cash flow of $48 million as it has attempted to produce its much-delayed next generation chip, and this burn rate has accelerated as the company has consumed $35 million of the $48 million in just the last 18 months. We believe that this 28-nanometer chip, when it is finally rolled out, will consume more power and create cost, system design, and supply chain challenges. Ceragon's debt-laden balance sheet will not support the expensive redesign needed to address these problems, which we fear could lead this entrenched Board to raise additional capital through a dilutive equity offering. The truth is that Ceragon is struggling on its own, and is not going to achieve outlandish price targets, or even its own projections. We continue to believe that Ceragon would see tremendous advantages from being part of a larger platform with more scale and resources as part of Aviat. In fact, ISS noted that a "lack of clear progress" could send Ceragon's stock lower in the absence of a transaction, including one with Aviat. THE CERAGON BOARD HAS DONE VIRTUALLY NOTHING TO EXPLORE (AND EVERYTHING POSSIBLE TO PREVENT) A POTENTIAL TRANSACTION WITH AVIAT OR TO MAXIMIZE VALUE FOR ALL SHAREHOLDERS. Despite Ceragon's claims to the contrary, the Board has repeatedly erected roadblocks to exploring a value creating transaction with Aviat at any price, even declining to name their own price when offered the opportunity. Instead, they indicated it would take two months to determine a price, which is not what would reasonably be expected from a party genuinely interested in "maximizing shareholder value" – and which is grossly inconsistent with how quickly they rejected both our original and revised public offers. ISS said that "it is questionable to what extent the board has been open to negotiating a deal," and that the Board "does not appear to have engaged in detailed discussions." We have been crystal clear since making our offer public on June 27 that our very strong preference is to negotiate a mutually agreeable transaction with Ceragon, and we have always believed that eventually they would come to the bargaining table. Unfortunately, since June, Ceragon has spent less than 30 minutes total in dialogue with Aviat, preferring instead to spend their time coming up with specious objections like demanding a reverse termination fee (payable from Aviat to Ceragon if a mutual definitive agreement was entered into but could not be closed) that was both unorthodox and outrageously high (~$60 million) as a prerequisite for discussions; complaining that our proposed reverse termination fee was too low, when in fact all we proposed is that it be based on market standards; or demanding that Aviat agree that Ceragon would not have to pay a termination fee (in the event someone else proposed to buy them after they executed a definitive agreement with Aviat). What we now recognize is that this Board cannot come to its senses, because the Board lacks the necessary independence to do the right thing for shareholders. CERAGON SHAREHOLDERS DESERVE A CHANCE FOR GREATER VALUE. THE ZISAPEL BLOC ON THE CERAGON BOARD IS THE PROBLEM. REPLACING A MAJORITY OF THE BOARD IS THE SOLUTION. Three members of Ceragon's seven-seat Board are closely tied to a fourth director, the Company's Chairman, Zohar Zisapel, and serve on boards or as executives of other companies he controls. Since their other business interests are closely tied to him, it is easy to understand why these directors would support Mr. Zisapel's interests over those of other Ceragon shareholders. ISS said that "investors may question to what extent they would challenge the company's chairman/co-founder." Together this bloc provides Mr. Zisapel with effective majority control of the Board. Please note that although Mr. Zisapel founded Ceragon, he neither owns nor controls the majority of voting shares. In fact, in February 2021, he 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, and has not replenished his position since, showing little confidence in Ceragon's future. The Zisapel bloc has presided over considerable destruction of shareholder value:
As the Board of a publicly traded company, Ceragon's directors should represent the interests of all shareholders, not just Mr. Zisapel. A VOTE FOR ALL OF AVIAT'S FIVE DIRECTOR NOMINEES ON THE GOLD PROXY CARD IS THE PATH TO CREATING GREATER BOARD INDEPENDENCE AND GREATER SHAREHOLDER VALUE. All five of our nominees are thoroughly independent – from Aviat itself, from Ceragon's management and, perhaps most importantly, from Mr. Zisapel – and able to provide a fresh, unbiased perspective at a critical junction for Ceragon. No matter what Ceragon tries to allege, when elected, all five of Aviat's nominees would honor their fiduciary responsibility to maximize shareholder value and evaluate and oversee fairly not just our proposal to acquire Ceragon but also any other path to value creation. To set the record straight on one of Ceragon's most outlandish red herrings, Aviat director nominee Jonathan Foster has the public company board experience to be an immediate asset to the Ceragon Board. Serving today on four other public company boards, service on Ceragon's Board would not make him over-boarded according to the criteria of either ISS or proxy advisory firm Glass Lewis, both of which consider a director over-boarded only if they serve on six or more boards concurrently. Ceragon has also used cherry-picked dates in an attempt to distort the record of another Aviat director nominee, Dennis Sadlowski, who as first a board member and then CEO of CECO Environmental Corporation helped that company significantly reduce its debt, strengthen its leadership team and implement strong processes and overall operational rigor. As usual, the Ceragon Board is trying to make issues where none exist, hoping you'll excuse them for refusing to engage in discussions regarding a combination with Aviat that would yield a significant premium for shareholders and provide a more effective platform for its technologies. Only by voting FOR Aviat's proposal to remove three entrenched Ceragon directors and FOR the election of ALL FIVE of Aviat's nominees on the GOLD proxy card TODAY can shareholders realize the considerable value of this combination. YOUR VOTE IS CRUCIAL. Please visit ValueForCeragon.com for more information. Sincerely, Peter A. Smith About Aviat Networks, Inc. Forward-Looking Statements
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 Okapi Partners LLC Media Contact Abernathy MacGregor
View original content to download multimedia:https://www.prnewswire.com/news-releases/aviat-networks-issues-open-letter-to-ceragon-networks-shareholders-to-correct-the-latest-false-claims-and-mischaracterizations-from-the-ceragon-board-301603917.html SOURCE Aviat Networks, Inc. |