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Gilat Announces GVT Agreement and Expected Positive Impact on 1998 Results.

Petah Tikva, Israel--(BUSINESS WIRE)--April 6, 1998--Gilat Satellite Networks Ltd. (NASDAQ:GILTF) announced today the signing of a definitive agreement concerning the private placement for its subsidiary Global Village Telecom (GVT), previously reported on Feb. 26, 1998.

Funds from the placement, when completed, will be used for the deployment of rural telephony networks in developing countries, based on Gilat's DialAway(tm) VSAT technology, as well as for operating expenses and other corporate purposes.

GVT intends to offer its services to a market containing a total population of more than 3 billion with an average of 3.5 telephone lines per 100 inhabitants, according to the International Telecommunications Union 1995 Report. Gilat President and Chief Operating Officer Amiram Levinberg stated, "We believe we have one of the most cost-effective solutions for rural telephony available today. With the funds from the private placement, GVT is now very well positioned to address its target markets."

Gilat Vice President of Finance & Administration and Chief Financial Officer Yoav Leibovitch added, "We expect the GVT placement to have a positive impact on Gilat's financial results in 1998, this in addition to anticipated strong first quarter results."

A definitive agreement was recently signed among Gilat, GVT and an international group of investors. The agreement stipulates co-ownership of Gilat's DialAway VSAT technology between Gilat and GVT. Upon closing, the investors will hold approximately 95 percent of the outstanding equity of GVT for an investment of US$40 million and Gilat will retain approximately 5 percent of GVT for an investment of US$2.5 million.

Gilat will also provide a US$7.5 million loan convertible into common shares equal to approximately 15 percent of GVT. Depending on the investors' return on investment and the occurrence of certain events, Gilat may further increase its holdings by as much as an additional 22 percent, upon exercise of a warrant to acquire additional common shares at par value. This could bring the maximum potential holdings of Gilat in GVT to approximately 40 percent.

The investors will be issued warrants to purchase an additional 15 percent of GVT at the per share price of the private placement for up to two years from the date of closing. Closing of the placement is subject to certain conditions. Gilat Satellite Networks Ltd. designs, develops, manufactures, markets and supports Very Small Aperture Terminal (VSAT) satellite earth stations and related hub equipment and software.

Gilat products are incorporated into telecommunications networks that provide satellite-based communications between a central location and a large number of geographically dispersed sites. The Company offers a range of products: Skystar Advantage(TM), which incorporates Gilat's TwoWay(TM) VSAT into GE Spacenet's Skystar Advantage system, enables interactive, transaction-oriented applications; ISAT(R) enables frame-relay delivery of voice and data; FaraWay(TM) VSAT offers multi-channel, toll-quality telephone, fax and data services; DialAway(TM) VSAT offers 1 to 3 channels, DAMA telephone and fax service to rural communities; SkySurfer(TM) VSAT, the Company's first PC plug-in card, delivers satellite-based Intranet-access; OneWay(TM) VSAT provides unidirectional data broadcasts.

In December 1996, Gilat acquired Skydata Inc., a Florida-based VSAT company specializing in the paging and data broadcast markets.

Skystar Advantage(TM) is a trademark of GE Capital Spacenet Services, Inc. and is a joint development of GE Capital Spacenet Services, Inc. and Gilat Satellite Networks Ltd. TwoWay(TM), FaraWay(TM), DialAway(TM), SkySurfer(TM) and OneWay(TM) VSAT and are trademarks of Gilat Satellite Networks Ltd. ISAT(TM) is a trademark of Skydata, Inc. GSAT(TM) is a trademark of GTECH Corp. TerraSat(TM) is a trademark of COMSAT RSI, Inc.

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate", "project", "intend", "expect", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to the Company's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for the Company's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key OEM partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with the Company's international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission.

CONTACT: Yoav Leibovitch Ruder Finn, Inc.

Chief Financial Officer Robert D. Ferris

Gilat Satellite Networks Ltd. 212/715-1573

Petah Tikva, Israel Steven Curtis

(972) 3 925-2007 212/593-6319
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Publication:Business Wire
Date:Apr 6, 1998
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