Offering of New Ordinary Shares

BATM Advanced Communications Ld
9 November 1999
 

Not  for  release or distribution in or into  the  United
States of America, Canada, Japan or Australia

          BATM Advanced Communications Limited
                            
             Offering of new ordinary shares

BATM Advanced Communications Limited ('BATM' or the
'Company'), the Israeli high technology networking
company, today announces an offering of up to 3.3 million
new ordinary shares, representing approximately 9.9 per
cent. of the existing issued share capital of the Company
('the Offering').  Dresdner Kleinwort Benson is sole
bookrunner for the Offering.

Background to and reasons for the Offering

BATM is primarily a designer and manufacturer of
communications equipment for corporate networks, both
within buildings and between buildings.  The company's
product range is focused on products embodying
considerable in-house research and development.

The last two years have seen the rapid development of
BATM's products aimed at the LAN and WAN.  Products
include the TITAN T4 switch that has the capacity to
combine high density 96 fast ethernet (10/100 mb) and 12
gigabit ethernet ports and the recently launched TITAN T5,
capable of twice the switching capacity of the TITAN T4.
These products combine fast switching with high levels of
flexibility of network connectivity across both copper and
fibre optic networks including recent VDSL modules.
Additionally, BATM has been developing a non-blocking
TITAN T6 switch, a prototype of which was recently
profiled at the Geneva Telecom show in October 1999.  This
generic switch demonstrated non-blocking switching
capability of 256 gigabit.  BATM intends to commence
external Beta trials of the TITAN T6 in April 2000.  The
Company has recently announced further orders from 3M
totalling US$18.5 million for fiscal 2000.  As a next-
generation product, BATM is working on the development of
a photonic switch, the TITAN T8, capable of switching
optical signals without conversion to electronic form.

Total sales have risen to US$18.1 million in fiscal 1998
with US$10.9 million being achieved in the first half of
fiscal 1999.  Major customers now include major OEMs such
as IBM and 3M.  Operating profit for the first half of
1999 at US$1.9 million is up 121 per cent. over the
corresponding same period in the prior year, largely as a
result of the benefits of turnover growth.  Gross profit
margin increased from 44 per cent. to 50 per cent., whilst
selling, general and administrative expenses decreased
from 30 per cent. to 26 per cent. of sales.  Profit after
taxes and minorities for the first half of fiscal 1999 was
US$2.7 million giving earnings per share of 8.50 cents, an
increase of 120 per cent. over the same period fiscal
1998.

BATM's strategy is to attain technological excellence
while achieving penetration of its products in the packet
based networking, telecommunications and data
communications markets.  As well as organic sales growth,
BATM considers that, in order to increase significantly
its market share, it requires to strengthen its
relationships with OEMs, many of whom are US companies.
BATM believes this will be best achieved through the
acquisition of businesses in the related areas of
networking technology and datacoms equipment.

The share issue is being undertaken to provide funds for
acquisitions that will complement existing BATM
technologies as well as providing broader distribution
channels to market for its products.  The primary focus of
BATM's acquisition strategy will be in the US, where the
board considers there are a large number of such
acquisition opportunities.  In addition a number of
opportunities also exist in Europe.  The net proceeds of
the issue will therefore mainly be applied to this
acquisition strategy.

BATM is currently reviewing a number of potential
transactions.  However, in order to compete successfully
in a fast moving environment, potential vendors require
certainty of funding.  In addition, BATM considers that
such acquisitions are best funded wholly or largely out of
the proceeds from issuing new equity in the Company.
Accordingly, BATM considers that it is now appropriate to
raise new equity, amounting to approximately 9.99 per
cent. of the Company's existing issued share capital.  The
net proceeds of which will provide the Company with the
flexibility to pursue both its acquisition and organic
growth strategies.

Extension of 3M option

3M has agreed to extend its option - which enables it to
increase its current holding of 4.34 per cent. of the
share capital of BATM to 9.9 per cent. of the enlarged
share capital of BATM at that point in time (at the market
price then prevailing) - from 31 May 2000 to 31 December
2000.

Details of the Offering

The offering will be undertaken by Dresdner Kleinwort
Benson, as sole book-runner, by way of an accelerated
bookbuilding process.  The exact number of shares to be
placed will be determined upon completion of the
bookbuilding exercise.  This, together with details of
the pricing of the issue, are expected to be announced on
or around Thursday, 11 November 1999.

The book will be open with immediate effect and Dresdner
Kleinwort Benson reserves the right to close the book at
any time.  Application will be made for admission of the
new ordinary shares to the Official List of the London
Stock Exchange.

Directors' interests and lock-up arrangements

Dr. Zvi Marom and Dr. Dan Kaznelson have indicated that
they intend to sell 150,000 and 1,000 ordinary shares
respectively out of their current shareholdings of
10,325,090 and 113,636 ordinary shares respectively.
These shares will be sold by Dresdner Kleinwort Benson on
behalf of Dr. Marom and Dr. Kaznelson contemporaneously
with the Offering.  As part of the arrangements relating
to the Offering, the Directors of BATM will undertake not
to dispose of any further shares for a period of 12
months from the date of the Offering.  In addition the
Company will undertake not to issue further new ordinary
shares for a period of 6 months following the Offering.

The non-executive chairman, Mr David Goldman, died on 26
October 1999.  At the time of his death Mr Goldman owned
5 million ordinary shares in the Company (representing
15.2% of the issued share capital of BATM).  BATM has
grounds to believe that this shareholding will continue
to be held by the Goldman family.

Current trading and prospects

In October, at a ceremony at George Washington
University, the joint venture between the Company and 3M
received a grant of US$1.0 million from the U.S.-Israel
Science & Technology Commission for the development of
the Titan T6 switch.  The terms of the grant entitle the
Foundation to royalties of 2 per cent. on all sales of
the Titan T6 until the full amount of the grant is repaid
and the government of Israel may ask the Company to grant
licenses of the Titan T6 to third parties where it
considers it reasonable to do so.

Since the publication of the Interim Results, the
Company's trading performance has been in line with
expectations and other than as described above, there
have been no material changes in the business or
prospects of the Company.

Chief Executive - Comment

Commenting on the offering, Zvi Marom, Chief Executive
said: 'The Offering represents an important step in
BATM's strategy. Against our strong portfolio of
products, the proceeds we receive will enable us to
concentrate our marketing efforts through carefully
selected acquisitions of complementary businesses in the
areas of telecommunications and data communications.'

For further information:

BATM                         Tues 9th, Wed 10th  0207 623 8000                
         
Ofer Bar-Ner, Chief          Thereafter 00 972 3 938 6888
Financial Officer
                             
Dresdner Kleinwort Benson    0207 623 8000
Mark Smith                   
Christopher Wilkinson        
                             
Shore Capital and Corporate  0207 734 7293
Limited
Graham Shore                 
                             
Ludgate Communications       0207 253 2252
Edward Macquisten