It was expected. Three months after Oren Most took over as CEO of Gilat Satellite Networks (Nasdaq: GILTF), a far-reaching restructuring is getting underway, including sharp cuts in operational expenditures. Gilat will close or merge some of its branches in the 20 countries in which it has a presence and lay off scores of employees in Israel and overseas, including top managers. The exact number of lay-offs has not yet been determined.
Most has been learning Gilat’s business in Israel and overseas since taking up his post. He discovered that the company’s management and structure were inefficient and full of redundancies, necessitating extensive changes in addition to the creditors arrangement concluded three months ago. Gilat has already laid off 1,000 employees since it ran into trouble. Its workforce now numbers 900, including 350 in Israel.
Gilat has $250 million in annual sales, but the high cost of setting up and operating satellite networks has hurt the company’s operating results. Despite substantial improvement in recent quarters, Gilat still posted a $25 million operating loss in the last quarter. The restructuring is intended to further slash operating costs in order to achieve an operating profit.
Following the creditors arrangement, Eliezer Fishman became the largest shareholder in Gilat, with 16.67%, followed by Bank Hapoalim (LSE:BKHD; TASE:POLI), with 13.72%. Bank Hapoalim, which loaned Gilat $71.4 million, also holds convertible bonds scheduled for redemption in 2012. Gilat’s third largest shareholder is Israel Discount Bank (TASE:DSCT), with 8.89%.
The largest foreign shareholder is US satellite airtime provider SES Americom, which converted Gilat’s debt to shares, and now owns 7.16% of the company.
Eliezer Fishman is the controlling shareholder in “Globes”.
Published by Globes [online] - www.globes.co.il - on June 25, 2003