Filed by Gilat Satellite Networks Ltd.
Pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 13e-4
under the Securities Exchange Act of 1934
Subject Company: rStar Corporation
Commission File No. 0-1084561
On January 2, 2002, Gilat Satellite Networks Ltd. and rStar Corporation issued
the following joint press release:
IMMEDIATE RELEASE
- -----------------
January 2, 2002
RSTAR CORPORATION AND GILAT SATELLITE NETWORKS LTD.
UPDATE THEIR SCHEDULE TO CLOSE THE PENDING ACQUISITION
AND TENDER OFFER
rStar Common Stock to continue to be listed on the Nasdaq National Market
San Ramon, California, and Petah Tikva, Israel, January 2, 2002 - rStar
Corporation (Nasdaq: RSTR) and Gilat Satellite Networks Ltd. (Nasdaq: GILTF), a
worldwide leader in satellite networking technology, announced today their
schedule to close the pending and previously announced acquisition by rStar of
Gilat's StarBand Latin America business and the pending and previously announced
tender offer for shares of rStar common stock.
On September 25, 2001, rStar filed a proxy statement with the Securities and
Exchange Commission ("SEC"), seeking stockholder approval for the transactions.
On October 11, 2001, Gilat filed a registration statement on Form F-4 with the
SEC, to register the Gilat ordinary shares that will be offered to rStar
stockholders in the tender offer. The parties stated that they have received
comments from the SEC staff and were currently revising their respective filings
to respond to the SEC comments.
The parties also announced that, due to a variety of reasons, including the
market conditions of the past few months, they have revised a few of the terms
of the transactions and, consequently, entered into a second amended and
restated acquisition agreement. The four principal changes to the previously
announced terms are as follows:
* First, the termination date of the acquisition agreement has been extended
to May 31, 2002. Lance Mortensen, the President and CEO of rStar commented
that "While we
acknowledge that the process has taken longer than what we anticipated, all
the parties are committed to closing the transactions as quickly as
possible. The extension of the termination date reflects our ongoing
commitment to closing the transaction we have undertaken. Although the
termination date of the transaction has been extended to May 31, 2002, we
also remain hopeful that, subject to completion of the SEC review process,
we can close the transactions prior to the end of the first quarter of
2002."
* Second, the parties announced a change in the cash consideration to be paid
by rStar in the tender offer. Previously, rStar had agreed to acquire up to
6,315,789 shares of rStar common stock, constituting approximately 29% of
the outstanding shares of rStar common stock not held by Gilat and its
corporate affiliates, in exchange for $0.95 in cash and .0738 of an ordinary
share of Gilat for each share of rStar common stock tendered in the tender
offer. Under the revised terms of the tender offer, the cash consideration
that rStar stockholders will receive in exchange for their shares of rStar
common stock will equal an amount between $0.32 and $1.58 per tendered
share. The exact amount of the cash consideration will be calculated
pursuant to a formula, described below, which is tied to the average closing
price for Gilat's ordinary shares over a consecutive 10-day trading period
ending on the fifth trading day prior to the expiration of the offer. If
more than 6,315,789 shares of rStar common stock are tendered, rStar intends
to purchase shares on a pro rata basis up to such number. If all
outstanding shares of rStar common stock (except shares held by Gilat and
its corporate affiliates) are tendered, each tendering stockholder will be
able to tender approximately 29% of his or her shares. Under the revised
terms, the aggregate cash consideration payable in the tender offer,
assuming the maximum number of shares of rStar common stock are tendered in
the offer, will range between a minimum of approximately $2 million and a
maximum of approximately $10 million.
* Third, the parties amended the acquisition agreement to clarify that in
Mexico, rStar will only have a non-exclusive right to provide certain
satellite-based voice and data services to small office and home office
subscribers through an entity that meets certain stated criteria and will
not have any rights to provide such services to the consumer market in
Mexico. These limitations on rStar's rights will provide Gilat with the
flexibility to pursue transactions in Mexico with other partners.
* Fourth, under the previously announced terms of the acquisition agreement,
in the event that the StarBand Latin America business does not achieve
certain earnings targets during each of the one year periods ended June 30,
2003 and June 30, 2004, rStar stockholders of record (excluding Gilat and
its corporate affiliates) as of June 30, 2003 or June 30, 2004, will be
entitled to their pro rata share of a special cash distribution equal to
either $2.5 million or $5 million in cash in each year (depending upon the
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amount of earnings actually achieved by the StarBand Latin America business
during those one year periods). The parties have agreed to revise the terms
of this special cash distribution and the additional share issuance to
provide that rStar stockholders will not be entitled to a special cash
distribution and Gilat will not be entitled to the additional share
issuance, not only in the event of an rStar qualified public offering
meeting certain criteria, as previously agreed, but also if rStar closes a
sale of rStar common stock, in a single transaction, to a party other than
Gilat and its affiliates that raises gross proceeds to rStar of at least
$100 million, at a price of rStar common stock equal to $1 per share. Under
the revised terms, only 60% of these proceeds need to be in the form of
cash.
The formula by which the per share cash consideration for the tender offer will
be calculated is as follows:
* If the average trading price for Gilat's ordinary shares equals $12.00, the
total cash consideration to be offered will equal $6,000,000, or $0.95 per
share of rStar common stock.
* If the average trading price for Gilat's ordinary shares is less than
$12.00, the total cash consideration of $6,000,000 will be increased by an
amount equal to the difference between $12.00 and the average trading price
of Gilat ordinary shares, multiplied by 466,105, which is the maximum number
of Gilat ordinary shares that may be delivered in the tender offer. The
increased total cash consideration will then be divided by 6,315,789, which
is the maximum number of rStar shares that may be tendered in the offer, to
determine the value of the per share cash consideration. However, in no
event will the cash consideration be more than $1.58 per share.
* If the average trading price for Gilat's ordinary share is more than $12.00,
the total cash consideration of $6,000,000 will be reduced by the difference
between the average trading price of Gilat ordinary shares and $12.00,
multiplied by 466,105, which is the maximum number of Gilat ordinary shares
that may be delivered in the tender offer. This reduced total cash
consideration will then be divided by 6,315,789, which is the maximum number
of rStar shares that may be tendered in the tender offer, to determine the
value of the per share cash consideration. However, in no event will the
cash consideration be less than $0.32 per share.
Mr. Mortensen also commented that, "We believe that determining the amount of
cash to be received by our stockholders based upon the market price of Gilat's
ordinary shares adjusts the tender offer to reflect the reality of the market
place. In other words, the amount of cash is directly tied to the market price
of the Gilat ordinary shares - if the price of the ordinary shares goes up, then
our stockholders will receive less cash because the ordinary shares they will
also receive are worth more. Conversely, our stockholders will receive more
cash if the market price of the ordinary shares goes down."
Mr. Yoel Gat, Gilat's Chairman and CEO stated: "The amended acquisition
agreement will allow Gilat and its partners additional flexibility with respect
to business opportunities in Mexico. Upon closing this transaction, rStar
expects that approximately $20 million will be
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available to fund StarBand Latin America's business plan. We continue to see
significant opportunity in the Latin American markets for our products and for
StarBand Latin America's services."
rStar's Board of Directors has approved the revised terms of the transactions
and the offer. However, neither rStar nor its Board of Directors is making any
recommendation to its stockholders as to whether to tender or refrain from
tendering their shares. Stockholders must make their own decision as to whether
to tender their shares and, if so, how many shares to tender.
Continued Nasdaq Listing
Separately, rStar announced that on December 10, 2001, it was informed by The
Nasdaq Stock Market, that its common stock would continue to be listed on the
Nasdaq National Market and that its hearing file would be closed. Previously,
The Nasdaq National Market informed rStar that it failed to maintain a minimum
bid price in accordance with Nasdaq Marketplace Rule 4450(a)(5), that it failed
to satisfy the net tangible assets requirements in accordance with Nasdaq
Marketplace Rules 4450(a)(3) and 4450(b)(1), and that it violated Nasdaq's
shareholder approval requirements, as set forth in Nasdaq Marketplace Rules
4350(i)(1)(C)(i) and/or 4350(i)(1)(C)(ii). In its written decision on all of
the above-matters, the Nasdaq Listing Qualification Panel acknowledged that (i)
rStar has regained compliance with the net tangible assets/shareholders' equity
requirement, (ii) the Nasdaq had temporarily waived the minimum bid price
requirement and (iii) that the issues related to stockholder approval do not
warrant delisting of the rStar's common stock. Note, however, that Nasdaq's
waiver of the minimum bid price requirement expires on January 2, 2002. Because
rStar currently does not satisfy the minimum bid price requirement, there is no
assurance that rStar will remain listed on Nasdaq.
This press release is for informational purposes only and is not an offer to buy
or the solicitation of an offer to sell any shares of rStar's common stock. The
solicitation of offers to buy rStar's common stock will only be made pursuant to
the Offer to Purchase and related materials that rStar and Gilat will be sending
out to rStar's stockholders shortly. rStar stockholders should read those
materials carefully because they will contain important information, including
the various terms and conditions to the offer.
About Gilat Satellite Networks Ltd.
Gilat Satellite Networks Ltd., with its global subsidiaries Spacenet Inc., Gilat
Europe and Gilat Latin America, is a leading provider of telecommunications
solutions based on VSAT satellite network technology. Gilat provides
satellite-based, end-to-end enterprise networking and rural telephony solutions
to customers across six continents, and markets interactive broadband data
services. Gilat is a joint venture partner, with Microsoft Corp., EchoStar
Communications Corp. and ING Furman Selz Investments, in StarBand Communications
Inc., America's first consumer, always-on, nationwide, two way, high-speed
satellite Internet service provider. StarBand Communications Inc. is based in
McLean, Virginia. SkyBlaster(TM), Skystar Advantage(R), DialAway(R) DialAw@y
IP(tm) and FaraWay(TM) are trademarks or registered trademarks of
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Gilat Satellite Networks Ltd. or its subsidiaries. Visit Gilat at www.gilat.com
and StarBand Communications Inc. at www.starband.com.
About rStar Corporation
rStar (Nasdaq: RSTR) through its rStar Broadband Networks, Inc. subsidiary,
develops, provides and manages satellite-based networks for large-scale
deployment across corporate enterprises and user communities of interest.
rStar's core products include remote high-speed Internet access, data delivery,
high-quality video and networking services distributed though its satellite
broadband Internet gateway and bi-directional solutions. rStar's technology
assures instantaneous, consistent, secure and reliable delivery of content
within the rStar network. rStar is located in San Ramon, California, and can be
reached at 925-543-0300 or at www.rstar.com on the Web.
About StarBand Latin America
The StarBand Latin America business operates satellite-based rural telephony
networks in Colombia and Chile. StarBand Latin America also provides hardware
and services solutions for ISPs and other service providers requiring
satellite-based high-speed Internet access throughout the region. An indirect
subsidiary of Gilat Satellite Networks, StarBand Latin America expects to begin
offering service upon completion of the series of transactions with rStar,
working with its in-country partners to address opportunities with small
office/home office and consumer market segments. Coupled with Gilat's unique
technology for bundling satellite-based telephony and IP connectivity, StarBand
Latin America has a set of product offerings that will enable its partners to
deliver world-class Internet solutions throughout the region.
Important Legal Information
The tender offer for the outstanding rStar common stock described in this press
release has not yet commenced. This announcement is neither an offer to purchase
shares nor a solicitation of an offer to sell securities, or any recommendation
with respect to the tender offer. At the time the offer is commenced, rStar and
Gilat will file a Tender Offer Statement with the U.S. Securities and Exchange
Commission. We advise all security holders to read the tender offer statement
when it is available, because it will contain important information. You can get
the tender offer statement and other filed documents, when they are available,
for free at the Securities and Exchange Commission's website (www.sec.gov). You
can also get the tender offer statement and all other filed documents for free
from rStar or Gilat.
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
rStar and Gilat 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 Gilat's products,
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inability to timely develop and introduce new technologies, products and
applications, rapid changes in the market for Gilat'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 Gilat's proprietary technology and risks associated
with its international operations and Gilat's location in Israel For additional
information regarding these and other risks and uncertainties associated with
rStar and Gilat's business, reference is made to rStar's and Gilat's reports
filed from time to time with the Securities and Exchange Commission
FOR FURTHER INFORMATION:
GILAT COMPANY CONTACT:
Tim Perrott
Vice President, Investor Relations
Gilat Satellite Networks
McLean, Virginia
703-848-1515
Tim.Perrott@spacenet.com
GILAT INVESTOR RELATIONS CONTACT:
Ruder Finn, Inc.
Magda Gagliano
212-593-6319
gaglianom@ruderfinn.com
RSTAR CORPORATION CONTACT:
Juleen Murray
925-543-0300
RSTAR INVESTOR RELATIONS CONTACT:
Cecilia A. Wilkinson/Julie MacMedan
PondelWilkinson MS&L
310-207-9300investor@pondel.com
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