If the Court accepts the application, the Tel-Aviv District Court will convene a meeting to be tentatively scheduled for early January 2003, of the Company's banking creditors and bondholders to vote on the restructuring plan. The Company expects to distribute proxy information to the bondholders during December. The plan as submitted has been approved by the Company's primary lender and holders of a majority of the bonds, but is subject to finalization of definitive agreements with the banks, bondholders and another major vendor.

Gilat Chairman and CEO Yoel Gat said, "We have reached an agreement with our banks and a majority of bondholders, thus enabling us to move forward with the procedural closing phase in order to complete our debt restructuring. Closing will mark the end of our restructuring plan and will position the Company on a path of growth, with a significantly improved balance sheet and operating structure."

The plan as submitted to the Court stipulates that bondholders will convert approximately 77% of its debt of $361,974,000, or $278,720,000 into approximately 80% of the outstanding shares post restructuring or $1.38 of debt per share. In addition, the bondholders will receive in exchange for the remaining debt of $83,254,000 a new, 10-year convertible bond, with a 4% annual interest rate and a voluntary conversion price of $0.87 per share. The interest payments will be deferred in 2003 and 2004, after which time the interest payments commence semi-annually in 2005. Principle repayment of the bonds will begin in 2010 and 2011 with $5 million each year, and principle balance due in 2012. The Company will have the right to force conversion under certain conditions.

The plan calls for the Company's lead banker, Bank Hapoalim, to convert $25,500,000 of its existing bank debt to new equity equal to approximately 7.31% of the outstanding equity post restructuring and $5,100,000 into new convertible bonds. The Bank is also a bondholder and its expecting holdings post-structuring will be 14.1%. The Bank has also agreed that the remaining debt of $71,400,000 will be under the following terms: Interest - Libor plus 2.5%, payable semi-annually; 10 year term with 2 year grace period on principal, partial grace period in 2005 and 7 remaining years of full payment. The plan contemplates that the other banks will amend their loans under substantially the same terms.

"The bondholder representatives and banks have made an exceptional effort to conclude an arrangement that will shrink the Company's debt to a manageable size and enable future growth," said Yoel Gat. "We will make every effort to make Gilat successful and reward their confidence and cooperation with real value in the near future."

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