The announced changes were made in connection with Bank Hapoalim informing the Company that it has completed the sale of its $70.4 million loan and the corresponding warrant to York Capital Management.

In addition, Bank Hapoalim has granted to York an option to purchase 1,000,809 of its approximately 3.3 million Gilat shares.

At the same time, Bank Hapoalim sold an additional 1,250,000 shares to Mivtach Shamir Holdings Ltd. Bank Hapoalim and Mivtach Shamir agreed to provide York with a proxy to vote all of these approximately 3.3 million Gilat shares as part of the transaction.

The proxy is to remain valid until the earlier of two years from the closing and the date upon which such shares are sold.

York Capital Management is an investment fund headquartered in New York City with approximately $6 billion in assets. York was founded in 1991 and specializes in value oriented and event driven equity and credit investments.

Mivtach Shamir Holdings Is an investment company traded on the Tel-Aviv stock exchange that focuses on investments in areas such as technology, communications, real-estate and venture capital.

In connection with the transaction, six existing members of the Board resigned and new directors were appointed.

The resigning directors include Gilat's Chairman and Chief Executive Officer, Mr. Shlomo Rodav, as well as Robert Bednarek, Pinchas Buchris, Gideon Chitayat, Abraham Neyman, and external director, Ms. Linda Harnevo. External director Mr. Haim Benjamini will continue to serve on the Company's board.

In addition to Mr. Benjamini and joining the Company's board of directors is chairman of the board Mr. Amiram Levinberg, co-founder and President of Gilat from 1995-2003; Mr. Jeremy Blank, vice president of York Capital Management and former vice president within Morgan Stanley's fixed income and investment banking departments; Dr. Udi Ganani, Chairman of the board of Aeronautics Defense Systems and former Chief Executive Officer of Israel Military Industries; Ms. Karen Sarid, General Manager of Orex Computed Radiography, a Kodak company and former Chief Financial Officer and Board member of Foresoft, a subsidiary of the Formula Group; and Mr. Izhak Tamir, President and Director of Orckit Communications.

In accordance with the Israeli Companies Law, the appointment of Mr. Levinberg as both CEO and Chairman of the Board is subject to shareholder approval.

The Company also announced that it intends to convene a special shareholders meeting on August 30, 2005. Among the items on the agenda will be the re-election of the new members of the Company's Board of Directors, the appointment of Amiram Levinberg as chairman of the board and chief executive officer, and the nomination of Ms. Leora Meridor, as external director to replace Ms. Linda Harnevo. Ms. Meridor has served as the chairman of Bezeq International since January 2001.

Amiram Levinberg, Gilat's new chairman of the board said: "I want to thank Shlomo Rodav for his devoted service to the Company. Shlomo deserves substantial credit for the significant re-organization process Gilat has undergone during the past two years. Such process has been instrumental in the stabilization of the Company."

Mr. Levinberg added: "Today's market is more competitive and the goal of achieving profitability and growth has become increasingly challenging. I am returning home to the company I was privileged to co-found with a new mission: to re-strengthen Gilat's market position, extend its technological leadership and leverage the Company into new markets and service offerings. I know I have a great team working with me in pursuing these goals."

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