Form 8-K COMTECH TELECOMMUNICATIO For: Feb 23

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 23, 2016 

 

 

(Exact name of registrant as specified in its charter)

 

 

Delaware		0-7928		11-2139466
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

68 South Service Road, Suite 230
Melville, New York 11747

(Address of principal executive offices, including zip code)

 

(631) 962-7000

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

  

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

On February 23, 2016, Comtech Telecommunications Corp., a Delaware corporation (“Comtech”), completed its acquisition of TeleCommunication Systems, Inc., a Maryland corporation (“TCS”), pursuant to the Agreement and Plan of Merger, dated as of November 22, 2015 (the “Merger Agreement”), among Comtech, TCS and Typhoon Acquisition Corp., a Maryland corporation and a direct, wholly owned subsidiary of Comtech (“Merger Sub”).

 

As previously disclosed, a total of approximately 55,871,832 shares of Class A common stock, par value $0.01 per share (the “Class A Shares”), and Class B common stock, par value $0.01 per share (the “Class B Shares”, together with the Class A Shares, the “Shares”) (including Shares delivered through notices of guaranteed delivery), were validly tendered and not validly withdrawn in the tender offer (the “Offer”) to acquire all of the issued and outstanding Shares at a price of $5.00 per share (the “Offer Price”), representing approximately 88.32% of the issued and outstanding Shares as of the expiration of the Offer. The Offer expired at 5:00 P.M., New York City time, on Thursday, February 18, 2016. The number of Shares tendered in the Offer were accepted for payment and constituted a majority of all outstanding Shares satisfying the Minimum Condition (as defined in the Merger Agreement).

 

On February 19, 2016, Comtech issued a press release announcing the expiration and results of the Offer, a copy of which is attached as Exhibit (a)(5)(L) to Amendment No. 7 to Schedule TO filed by Comtech with the Securities and Exchange Commission (the “SEC”) on February 19, 2016 and is incorporated herein by reference.

 

Following the completion of the Offer, all conditions to the Merger set forth in the Merger Agreement were satisfied, and on February 23, 2016, Comtech completed its acquisition of TCS by effecting a merger in accordance with Section 3-106.1 of the Maryland General Corporation Law, pursuant to which Merger Sub was merged with and into TCS, with TCS surviving the merger as a wholly owned subsidiary of Comtech (the “Merger”). Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding Share, other than any Shares owned by Comtech, Merger Sub or any subsidiary of Comtech, Merger Sub or TCS immediately prior to the Effective Time, was automatically converted into the right to receive an amount in cash, without interest and subject to applicable withholding taxes, equal to the Offer Price.

 

At the Effective Time, each option to purchase Shares outstanding immediately prior to the Effective Time, by virtue of the Merger, was cancelled and converted into the right to receive an amount in cash, if any, without interest and less the amount of any tax withholdings, equal to the product of (i) the number of Shares underlying such option and (ii) an amount equal to (x) the Offer Price less (y) the per share exercise price of such option. In addition, at the Effective Time, each Share subject to forfeiture or other restrictions outstanding immediately prior to the Effective Time, by virtue of the Merger, was cancelled and converted into the right to receive an amount in cash, without interest and less the amount of any withholding taxes, equal to the product of (i) the number of Shares underlying such restricted share and (ii) the Offer Price; provided that any payments in respect of such restricted shares to which a former holder thereof may be eligible to receive will be earned subject to the same vesting schedule and other vesting terms and conditions which applied to such restricted shares prior to the Effective Time, and such payment shall become payable on the date or dates that such restricted shares would have become vested under the vesting schedule in place immediately prior to the Effective Time.

 

Following the consummation of the Merger, the Shares ceased to be listed on The NASDAQ Global Market.

 

On February 23, 2016, Comtech issued a press release announcing the completion of the Merger. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

 

The foregoing description of the Merger Agreement (including the description of the consideration payable in connection with the Merger) is not complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by Comtech on November 23, 2015, and is incorporated herein by reference.

 

 

Item 8.01  Other Events.

 

In connection with the consummation of the Merger, on February 23, 2016, Comtech issued a press release advising holders of TCS’ 7.75% Convertible Senior Notes (the “Notes”) that the Merger constituted a “Fundamental Change” entitling each holder of Notes to require TCS to purchase such holder’s Notes at the price set forth therein.  The press release also notified holders of the Notes of the redemption by TCS of all of the outstanding Notes. A copy of the press release is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(a)

Financial statements of business acquired.

 

The financial statements required by this Item with respect to TCS are incorporated herein by reference to Exhibits 99.1 and 99.2 to the Current Report on Form 8-K filed by Comtech with the SEC on December 15, 2015.

 

(b)

Pro forma financial information.

 

The pro forma financial information required by this Item is incorporated herein by reference to Exhibit 99.3 to the Current Report on Form 8-K filed by Comtech with the SEC on December 15, 2015. 

 

(d)

Exhibits

 

Exhibit No.		Description
2.1		Agreement and Plan of Merger, dated as of November 22, 2015, among Comtech Telecommunications Corp., Typhoon Acquisition Corp. and TeleCommunication Systems, Inc. (incorporated herein by reference to Exhibit 2.1 to Comtech Telecommunications Corp.’s Current Report on Form 8-K filed on November 23, 2015).
99.1		Press Release, dated February 19, 2016 (incorporated herein by reference to Exhibit (a)(5)(L) to Amendment No. 7 to Schedule TO filed by Comtech Telecommunications Corp. on February 19, 2016).
99.2		Press Release, dated February 23, 2016.
99.3		Press Release, dated February 23, 2016.
99.4		Audited Consolidated Financial Statements of TeleCommunication Systems, Inc., as of December 31, 2014 and 2013, and for each of the three years in the period ended December 31, 2014 (incorporated herein by reference to Exhibit 99.1 to Comtech Telecommunications Corp.’s Current Report on Form 8-K filed on December 15, 2015).
99.5		Unaudited Consolidated Financial Statements of TeleCommunication Systems, Inc., as of and for the three and nine months ended September 30, 2015 and 2014 (incorporated herein by reference to Exhibit 99.2 to Comtech Telecommunications Corp.’s Current Report on Form 8-K filed on December 15, 2015).
99.6		Unaudited Pro Forma Condensed Combined Financial Statements (incorporated herein by reference to Exhibit 99.3 to Comtech Telecommunications Corp.’s Current Report on Form 8-K filed on December 15, 2015).

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	COMTECH TELECOMMUNICATIONS CORP.
Date: February 23, 2016	By:	/s/ Michael D. Porcelain
		Name: Michael D. Porcelain
		Title:   Senior Vice President and Chief Financial Officer

 

 

EXHIBIT INDEX

 

Exhibit No.		Description
2.1		Agreement and Plan of Merger, dated as of November 22, 2015, among Comtech Telecommunications Corp., Typhoon Acquisition Corp. and TeleCommunication Systems, Inc. (incorporated herein by reference to Exhibit 2.1 to Comtech Telecommunications Corp.’s Current Report on Form 8-K filed on November 23, 2015).
99.1		Press Release, dated February 19, 2016 (incorporated herein by reference to Exhibit (a)(5)(L) to Amendment No. 7 to Schedule TO filed by Comtech Telecommunications Corp. on February 19, 2016).
99.2		Press Release, dated February 23, 2016.
99.3		Press Release, dated February 23, 2016.
99.4		Audited Consolidated Financial Statements of TeleCommunication Systems, Inc., as of December 31, 2014 and 2013, and for each of the three years in the period ended December 31, 2014 (incorporated herein by reference to Exhibit 99.1 to Comtech Telecommunications Corp.’s Current Report on Form 8-K filed on December 15, 2015).
99.5		Unaudited Consolidated Financial Statements of TeleCommunication Systems, Inc., as of and for the three and nine months ended September 30, 2015 and 2014 (incorporated herein by reference to Exhibit 99.2 to Comtech Telecommunications Corp.’s Current Report on Form 8-K filed on December 15, 2015).
99.6		Unaudited Pro Forma Condensed Combined Financial Statements (incorporated herein by reference to Exhibit 99.3 to Comtech Telecommunications Corp.’s Current Report on Form 8-K filed on December 15, 2015).

  

 

 

Exhibit 99.2

 

COMTECH TELECOMMUNICATIONS CORP. COMPLETES ACQUISITION OF TELECOMMUNICATION SYSTEMS, INC.

 

MELVILLE, NY – (February 23, 2016) – Comtech Telecommunications Corp. (NASDAQ: CMTL or “Comtech”) today announced it has closed its strategic and cash accretive acquisition of TeleCommunication Systems, Inc. (“TCS”). TCS stockholders received $5.00 per share in cash. As a result of the completion of the merger, the common stock of TCS is no longer listed for trading on the NASDAQ Global Market or any other exchange and trading ceased at the close of the markets on February 23, 2016.

 

TCS stockholders who hold shares through a bank or broker will not have to take any action to have their shares converted into cash, since these conversions will be handled by the bank or broker. Stockholders who hold stock certificates can surrender their certificates for $5.00 per share in cash, without interest and less any applicable withholding taxes, through the paying agent for the merger, American Stock Transfer & Trust Company, LLC.

 

Dr. Stanton Sloane, President and Chief Executive Officer of Comtech, commented, “We are excited to close the acquisition of TCS. The acquisition provides a transformational opportunity for Comtech and is a significant step in our strategy of entering complementary markets and expanding our domestic and international commercial offerings.”

 

Dr. Sloane added, “We continue to work hand in hand with TCS to integrate our two great companies and look forward to providing additional information about the close of the transaction on our second quarter financial results conference call which is scheduled to occur in March 2016.”

 

About Comtech Telecommunications Corp.

 

Comtech Telecommunications Corp. designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. Comtech sells products to a diverse customer base in the global commercial and government communications markets. Comtech believes it is a leader in most of the market segments that it serves.

 

Cautionary Statement Regarding Forward-Looking Statements

 

Certain information in this press release contains forward-looking statements regarding Comtech, including but not limited to, information relating to Comtech’s future performance and financial condition, plans and objectives of Comtech’s management and Comtech’s assumptions regarding such future performance, financial condition, plans and objectives that involve certain significant known and unknown risks and uncertainties and other factors not under Comtech’s control which may cause actual results, future performance and financial condition, and achievement of plans and objectives of Comtech’s management to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, among other things: the possibility that the expected synergies from the proposed merger will not be realized, or will not be realized within the anticipated time period; the risk that Comtech’s and TCS’ businesses will not be integrated successfully; the possibility of disruption from the merger making it more difficult to maintain business and operational relationships or retain key personnel; any actions taken by either of the companies, including but not limited to, restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions); the timing of receipt of, and Comtech’s performance on, new 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, frequent new product announcements and enhancements, changing customer demands, and changes in prevailing economic and political conditions; risks associated with Comtech’s legal proceedings and other matters; risks associated with Comtech’s obligations under its revolving credit facility and acquisition debt; and other factors described in Comtech’s and TCS’ filings with the SEC.

 

Media Contact for Comtech Telecommunications Corp.:

 

Michael D. Porcelain, Senior Vice President and Chief Financial Officer

(631) 962-7103

[email protected]

 

# # #

 

 PCMTL

 

Exhibit 99.3

Notice to TeleCommunication Systems, Inc. Holders of 7.75% Convertible Senior Notes due June 30, 2018

 

Melville, NY and Annapolis, Md – February 23, 2016 – Comtech Telecommunications Corp. (NASDAQ: CMTL or “Comtech”) and TeleCommunication Systems, Inc. (NASDAQ: TSYS or “TCS”) jointly announced today the completion of a tender offer by Typhoon Acquisition Corp., a Maryland corporation (the “Purchaser”) and a wholly-owned subsidiary of Comtech, to purchase any and all of the issued and outstanding shares of TCS’s common stock (the “TCS Shares”) at a price per TCS Share of  $5.00 (the “Offer Price”), net to the seller in cash, without interest and subject to any withholding of taxes required by applicable law, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 7, 2015 (as amended or supplemented from time to time, the “Offer to Purchase”), and in the related Letter of Transmittal (which, together with the Offer to Purchase, as each may be amended or supplemented from time to time, constitute the “Offer”). The Offer is described in a Tender Offer Statement on Schedule TO (as amended or supplemented from time to time, the “Schedule TO”) filed by Comtech and Purchaser with the Securities and Exchange Commission (the “SEC”) on December 7, 2015.

 

The Offer was made pursuant to the Agreement and Plan of Merger, dated as of November 22, 2015, by and among Comtech, Purchaser and TCS (as it may be amended or supplemented from time to time, the “Merger Agreement”). The Merger Agreement provided that, among other things, subject to the satisfaction or waiver of certain conditions, following completion of the Offer, and in accordance with the Maryland General Corporation Law, as amended (the “MGCL”), Purchaser was to be merged with and into TCS (the “Merger”). Following the consummation of the Merger, TCS will continue as the surviving corporation (the “Surviving Corporation”) as a wholly owned subsidiary of Comtech. 

 

The consummation of the Merger constitutes a Fundamental Change (as such term is defined in that certain Indenture (the “Original Indenture”), dated as of May 7, 2013, between TCS and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), as supplemented by that certain Supplemental Indenture, dated as of February 23, 2016, between TCS and the Trustee (the “Supplemental Indenture” and the Original Indenture as supplemented by the Supplemental Indenture, the “Indenture”)). Upon the happening of a Fundamental Change, each holder (each, a “Holder” and, collectively, the “Holders”) of any outstanding 7.75% Convertible Senior Notes due June 30, 2018 issued by TCS (the “Securities”) may elect to require the Surviving Corporation to purchase its Securities. Each Holder must exercise this purchase right by March 29, 2016. Notwithstanding the Fundamental Change, each Holder of any outstanding Securities retains the right under Section 5.01 of the Indenture to instead surrender its Securities for conversion. Each $1,000 principal amount of the Securities is convertible into the right to receive the amount of cash that a holder of 96.637 shares of TCS’s Class A common stock, par value $0.01 per share (the “Common Stock”), would receive as consideration in the Merger. The amount of cash that a holder of 96.637 shares of the Common Stock would receive in exchange for such shares would be $483.19, which amount is less than the Fundamental Change Purchase Price that would be payable to Holders who do not elect to convert their Securities. Further information regarding the Holders’ right to require the Surviving Corporation to purchase the Securities will be mailed to each Holder.

 

Notwithstanding the Holders’ right to require the Surviving Corporation to purchase its Securities upon the happening of a Fundamental Change under Section 3.01 of the Indenture, Holders should be aware that the Surviving Corporation has, concurrently with the delivery of the notice of Fundamental Change, delivered a Notice of Redemption to the Holders pursuant to which the Surviving Corporation has called for the redemption of all of the outstanding Securities on March 24, 2016 (the “Redemption Date”) at a price of $1,020 per $1,000 of Securities plus accrued and unpaid interest to, but not including, the Redemption Date, and, therefore, regardless of whether a Fundamental Change Purchase Notice has been delivered by any Holder, such Holder’s Securities will be redeemed on the Redemption Date in accordance with and pursuant to the terms of the Notice of Redemption.

 

About Comtech Telecommunications Corp.

 

Comtech Telecommunications Corp. designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. Comtech sells products to a diverse customer base in the global commercial and government communications markets. Comtech believes it is a leader in most of the market segments that it serves.

 

 Cautionary Statement Regarding Forward-Looking Statements

 

Certain information in this press release contains forward-looking statements regarding Comtech, including but not limited to, information relating to Comtech’s future performance and financial condition, plans and objectives of Comtech’s management and Comtech’s assumptions regarding such future performance, financial condition, plans and objectives that involve certain significant known and unknown risks and uncertainties and other factors not under Comtech’s control which may cause actual results, future performance and financial condition, and achievement of plans and objectives of Comtech’s management to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, among other things: the possibility that the expected synergies from the proposed merger will not be realized, or will not be realized within the anticipated time period; the risk that Comtech’s and TCS’ businesses will not be integrated successfully; the possibility of disruption from the merger making it more difficult to maintain business and operational relationships or retain key personnel; any actions taken by either of the companies, including but not limited to, restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions); the timing of receipt of, and Comtech’s performance on, new 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, frequent new product announcements and enhancements, changing customer demands, and changes in prevailing economic and political conditions; risks associated with Comtech’s legal proceedings and other matters; risks associated with Comtech’s obligations under its revolving credit facility and acquisition debt; and other factors described in Comtech’s and TCS’ filings with the SEC.

 

Media Contact for Comtech Telecommunications Corp.:

 

Michael D. Porcelain, Senior Vice President and Chief Financial Officer

(631) 962-7103

[email protected]

 

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PCMTL

 

 

 

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