Comtech secures improved credit terms and $35 million investment

CHANDLER, Ariz. - Comtech Telecommunications Corp. (NASDAQ:CMTL), currently valued at $69.67 million in market capitalization, announced today it has successfully negotiated amendments to its senior secured credit agreement that provide more favorable terms and enhanced financial flexibility. According to InvestingPro data, the company operates with a total debt of $251.52 million, making these amendments particularly significant for its financial structure.

The communications technology company secured a financial covenant holiday extending until after January 31, 2027, when the next test of fixed charge coverage ratio, net leverage ratio and minimum EBITDA covenants will occur. Lenders also waived prepayment fees on senior debt and deferred certain amortization and fee payments. This development is crucial as InvestingPro analysis shows the company’s current ratio at 0.74, indicating potential liquidity challenges. Get access to 8 more key ProTips and comprehensive analysis with an InvestingPro subscription.

Alongside these amendments, Comtech received a $35 million capital infusion through a subordinated debt investment from an existing holder of the company’s convertible preferred stock and subordinated debt. The new subordinated debt includes terms favorable to Comtech, with no make whole provision and no cash interest requirement.

The company plans to use the net proceeds to prepay a portion of its senior secured debt and increase liquidity. This move comes as the company faces significant cash burn, with negative EBITDA of $19.06 million in the last twelve months and revenue declining by 12.02% year-over-year.

"These agreements reflect the strong confidence our lenders and preferred stockholders have in the execution of Comtech’s transformation plan," said Ken Traub, Chairman, President and Chief Executive Officer.

Comtech reported a return to positive cash flow in the third quarter of fiscal 2025, according to the press release statement.

The company provides satellite and space communications technologies, terrestrial and wireless network solutions, and emergency services to commercial and government customers globally.

Complete details of the credit agreement amendments and subordinated debt agreement will be available in the company’s filings with the Securities and Exchange Commission. For deeper insights into Comtech’s financial health and detailed analysis, access the comprehensive Pro Research Report available exclusively on InvestingPro, covering over 1,400 US stocks with expert analysis and actionable intelligence.

In other recent news, Comtech Telecommunications Corp. reported its second quarter 2025 earnings, revealing consolidated net sales of $126.8 million, a slight decrease from the previous year’s $128.1 million. Despite the revenue decline, the company achieved a gross margin of 30.7%, up from 30.4% the previous year, and returned to positive GAAP cash flow from operations for the first time in eight quarters, totaling $2.3 million. The company also announced significant leadership changes in its Satellite and Space Communications segment, appointing Steve Black as Chief Operating Officer, Mark Dale as Chief Technology Officer, and Brent Norman as Chief Financial Officer. These appointments are part of Comtech’s ongoing transformation strategy aimed at enhancing its operational structure. Additionally, Comtech has made strategic decisions to discontinue over 70 low-margin products, aligning with its focus on high-margin products and cloud-based technologies. The company also secured a $40 million capital infusion, which allowed it to renegotiate terms with its senior secured lenders, enhancing financial flexibility. Analyst firm B. Riley noted the company’s progress in developing next-generation digital platforms, which could bolster future growth.

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