Gilat Satellite Networks Ltd. (NASDAQ: GILT) announced a private placement of convertible notes totaling approximately $100 million. The transaction involves Israeli institutional investors and is expected to close on September 1, 2026.

The notes carry an interest rate of 3.75% per annum and mature on September 1, 2031. They are senior unsecured obligations with no financial maintenance covenants. Interest is payable annually on September 1 of each year, beginning on September 1, 2027.

Deal Structure and Terms

The conversion price is set at $16.00 per ordinary share. This represents a premium of approximately 60% above the last reported sale price of $9.94 per share on August 28, 2026.

Gilat may elect to force conversion if the share price equals or exceeds $20.00 for 10 consecutive trading days, starting from September 1, 2027.

Interest Rate Adjustment

If the share price fails to reach an average of $15.00 over any consecutive 30-day period ending 18 months after issuance, the interest rate will increase by 1.25% for the subsequent period.

Use of Proceeds

The company intends to use net proceeds for general corporate purposes. Specific focus areas include accelerating investments in next-generation satellite and space technologies. This supports expansion in multi-orbit connectivity, mobility, ground, and defense technology capabilities.

Adi Sfadia, CEO of Gilat, stated that the financing strengthens financial flexibility to pursue organic investment and broaden addressable markets.

Regulatory Compliance

The private placement is restricted to Israel and excludes U.S. persons as defined under Rule 902 of the U.S. Securities Act of 1933. It relies on the registration exemption under Regulation S.

During the 40-day distribution compliance period under Category 2 of Regulation S, the notes cannot be offered or sold to U.S. persons. Gilat has undertaken to file a registration statement with the SEC within 12 months of closing for the resale of underlying ordinary shares.

Gilat Satellite Networks Ltd. reported second-quarter revenue of $122.7 million, surpassing analyst estimates of $120.7 million and rising from $105 million in the prior-year quarter. The company’s adjusted operating income increased 35% year over year to $12.6 million, and adjusted EPS of 20 cents exceeded expectations of 10 cents. This performance underscores strong execution across its Defense, Commercial, and Peru segments, driving improved margins despite broader market volatility.

The results were driven by solid execution across key business units, with CEO Adi Sfadia highlighting continued momentum in the Defense segment. Demand for advanced communication solutions supporting mobility, rapid deployment, and operational continuity grew in the U.S. and Europe. Additionally, the company launched the Viper Ka ESA terminal to support unmanned and autonomous missions and advanced certification efforts for next-generation defense communication systems.

Financial Performance Snapshot

Comtech Acquisition Progress

Gilat is progressing well with its acquisition of most of Comtech Telecommunications Corp.’s satellite and space communications business for $157.5 million, agreed in June. Management stated the deal represents a major step in expanding Gilat into a scaled defense, space, and mission-critical communications provider. The acquisition is expected to create a company with more than $700 million in pro forma annual revenue.

The deal is projected to more than double Defense revenue, expand U.S. engineering and manufacturing capabilities, and improve access to larger defense and space programs. It is expected to close by year-end, subject to regulatory approvals and closing conditions.

What the Numbers Show

The divergence between revenue growth (17%) and adjusted operating income growth (35%) indicates significant margin expansion in Q2. This suggests that the company is not only growing top-line sales but also improving operational efficiency, likely driven by the higher-margin defense contracts mentioned by management.

Outlook and Guidance

Gilat reaffirmed its FY2026 revenue guidance of $500 million-$520 million, compared with analyst expectations of $509.3 million. The company continues to see adjusted EBITDA of $61 to $66 million, representing a growth rate of approximately 19% at the midpoint. Despite the strong quarterly results, shares were down 5.12% at $11.30 at the time of publication, reflecting broader market sentiment or potential profit-taking following the beat.