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Cable Technology Feature Article

May 20, 2013

DIRECTV to Keep UniTek Outsourcing Despite Financial Mess

By Tara Seals, TMCnet Contributor

Embattled outsourcing provider UniTek Global Services (News - Alert) looks like it’s going to be able to keep a key customer: DIRECTV said it will keep the company on if UniTek meets its requirements during a massive financial overhaul.

UniTek provides outsourced infrastructure and technical services to the wireless and wireline telecommunications, satellite television and broadband cable industries in the United States and Canada. It is facing a class action complaint that alleges that the defendants misrepresented and/or failed to disclose material information regarding the company’s finances and operations. Its subsidiary Pinnacle Wireless is also accused of engaging in fraudulent activities that resulted in improper revenue recognition. Overall, the suit alleges that the company’s internal accounting controls were deficient and permitted improper revenue recognition, so UniTek’s financial statements were “materially false and misleading at all relevant times.”

DIRECTV has given UniTek’s DirectSat USA LLC subsidiary the 180-day notice required for DirecTV (News - Alert) to terminate its master outsourced services agreement with the company, effective Nov. 8, 2013. However, a separate agreement calls for that notice to be withdrawn if the company's planned refinancing of its debt, scheduled by July 31, meets terms that satisfy certain financial requirements, the continued work on completion of its financial statements and the satisfaction of other conditions.

DIRECTV has informed the company that it intends to continue working with UniTek as it addresses the issues it faces.

"While we take our rights seriously, we do value our relationship with UniTek and have been pleased with their service and performance,” said Dave Baker, senior vice president of DIRECTV. “We will continue to work with them over the next several months as the company completes its financial statements and public filings, and resolves other issues they are currently confronting."

Acknowledging DIRECTV's intent to assist the company, UniTek said it intends to move forward in working with DIRECTV and its other customers as it continues its efforts to resolve its issues and complete its required public filings.

"I believe that we can resolve our outstanding issues in a manner and on a timeframe that will allay DIRECTV's concerns and enable us to maintain our strategic partnership with them,” said Rocky Romanella, CEO of UniTek. “We are making significant progress toward the completion of the restatements and filing of our SEC (News - Alert) reports, and are engaged in active discussions with lenders regarding our outstanding debt. We are appreciative of DIRECTV's support during this time and their agreement to automatically withdraw the notice once we meet the required conditions."

Edited by Rachel Ramsey

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