The Ministry of Defense has removed the conditions restricting the marketing and export of Orbiter K1 UAVS by Aeronautics Ltd. (TASE:ARCS) to an important overseas customer. The conditions were imposed following a deal with the customer concerning which a criminal investigation against the company was opened. Aeronautics yesterday reported to the Tel Aviv Stock Exchange (TASE) that the Ministry of Defense had notified the company that the restriction was being removed immediately. Aeronautics says that it can now continue supplying UAVs to the customer. The contract is believed to amount to tens of millions of dollars.
Aeronautics also reported that the Ministry of Defense had temporarily suspended the listing of Aeronautics's CEO, VP business division, and another employee on the defense export registry, pending a hearing, until it is decided whether to file an indictment against any of these employees. After a decision is made about an indictment, the temporary suspension will be reconsidered.
Aeronautics's share price responded to the news with a 2% rise over two days. The company held its IPO on the TASE in June 2017 at a company value of NIS 1 billion, but its share lost over 60% of its value by late December, following the investigation and poor financial results. The company's share price then doubled in the next six weeks after Aharon Frenkel acquired 20% of the company and Aeronautics reported last month that it had accepted an offer by Rafael Advanced Defense Systems Ltd. and businessperson Avichai Stoller to begin negotiations for the acquisition of Aeronautics for NIS 850 million. Aeronautics's current market cap is NIS 680 million.
Defense industry sources described the Ministry of Defense's decision as a "dramatic" one that enables the company to renew its contacts with the important overseas customer and promote the weapons deal under which Aeronautics will supply the customer with self-destructing UAVs.
Published by Globes, Israel business news - en.globes.co.il - on February 5, 2019
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