Bank Hapoalim has agreed to reschedule debt of

Gilat Satellite Networks

(Nasdaq:GILTF).

Gilat will be making a first payment of $6 million instead of $18 million, on a $106 million loan taken out in 2000.

The company was supposed to repay Hapoalim through six instalments, once every six months, of $18 million each. Gilat is currently unable to meet that commitment.

The Hapoalim loan bears interest of Libor plus 0.8% - very low, considering Gilat's risk factor.

Gilat's long-term commitments total $150 million - $106 million to Hapoalim, and $42 million to Bank Leumi.

Hapoalim refused to comment on the arrangement, and no response could be obtained from Gilat.

Gilat can't fulfill its commitments to the banks, says UBS Warburg analyst Jonathan Half, but the banks do not want it to collapse. They therefore have no choice but to reschedule its debt.

At this point, Half says, the real question is over Gilat's bonds.

In total the company's debt is half a billion dollars, including the $350 million held by bond-holders. The bonds start coming due in 2005.

Maalot The Israel Securities Rating Company

recently downgraded Gilat's bonds from B to CCC and warned that Gilat might be unable to fulfill its commitments.

In other Gilat news, it won a contract with Artel Communications to build a satellite communications network serving Rwanda and other central African countries.

The original order for the network, called Dialaw@y, includes hub stations and 100 VSAT - very small aperture terminals. Gilat did not divulge the value of the order, but the price of VSATs ranges from $2,500 to $3,000 apiece.