<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[X] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
COMSAT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
Notes:
<PAGE>
Betty C. Alewine
LOGO President
Chief Executive Officer
- -------------------------------------------------------------------------------
6560 Rock Spring Drive
Bethesda, MD 20817
Telephone 301 214 3000
April 30, 1997
Dear Fellow COMSAT Shareholder:
Last July, I was elected President and CEO of your Company. Now, as then, my
top priority is to enhance value for all COMSAT shareholders. To achieve our
goal, we are repositioning COMSAT for the future, focusing on its strengths
and shedding those parts that are incompatible with a new and revitalized
COMSAT. We are making great progress in our efforts to strengthen your
Company.
. Last month, we announced our new strategic plan designed to focus your
Company on its core strengths in international telecommunications services
and technology. We firmly believe that this path will enhance value for all
of our shareholders.
. Last week, we filed for non-dominant status with the FCC. When approved,
this status will dramatically enhance our ability to compete with other
satellite companies.
. And, we renewed our commitment to communicate regularly with shareholders.
In recent weeks, our senior management has visited with many shareholders
and members of the investment community to discuss our new strategy and to
answer questions.
As part of that commitment, we want to keep you informed about key aspects
of the strategic plan. We also want to tell you about some important
challenges we face. Two New York-based shareholders--a speculative investor
and an arbitrageur--have threatened what undoubtedly will be a costly and very
disruptive proxy contest. They may seek your support in their effort to take
control of your Company, and we believe that effort is directly counter to
your best interests.
COMSAT'S STRATEGIC PLAN
FIRST, WE ARE VERY ENTHUSIASTIC ABOUT OUR STRATEGY; WE ARE CONVINCED THAT IT
IS THE MOST EFFECTIVE WAY TO ENHANCE THE VALUE OF YOUR COMSAT SHARES, NOW AND
OVER THE LONGER TERM. The new strategic plan builds upon our core
communications business. It includes the divestiture of Ascent, our
entertainment business, either through its sale or tax-free spin-off to
shareholders; the sale of COMSAT RSI, our manufacturing subsidiary; and the
sale of other non-core assets. THESE ACTIONS WILL STRENGTHEN OUR BALANCE
SHEET, REDUCE DEBT AND, MOST SIGNIFICANTLY, REALLOCATE CAPITAL TO THE HIGH-
GROWTH OPPORTUNITIES IN OUR PRIMARY BUSINESSES.
<PAGE>
As part of this plan, last week we filed with the FCC to end COMSAT's
"dominant carrier" status, a designation that regulates our rates and caps our
profitability. This regulation is simply no longer appropriate in this new era
of numerous international telecommunications alternatives. In addition, we are
pressing for privatization of the video and new services portion of INTELSAT.
Privatization would enable COMSAT to maximize the value of your interest in
the world's largest satellite system.
Implementation of the strategic plan will leave COMSAT well positioned for
the future, with ownership in two global satellite systems, state-of-the-art
technology, a strong and experienced management team, and a significant
presence in the fastest growing communications markets in the world.
As we reposition COMSAT for future growth, the Board of Directors recognized
that it must, for the immediate future, reduce dividends. Accordingly, the
Board declared a quarterly dividend of five cents per share payable on June 9,
1997, to shareholders of record on May 9, 1997. This action is fiscally
prudent and establishes a payout ratio that we can sustain in the near-term
while we move forward with our plans.
Soon, you will receive COMSAT's 1996 annual report, which elaborates on our
core businesses and strengths. We encourage you to give it careful attention.
THE DISSIDENTS DON'T UNDERSTAND
COMSAT OR ITS BUSINESS
Unfortunately, a group of dissident shareholders, led by Herbert Denton, an
advisor to speculative investors, and Guy Wyser-Pratte, an arbitrageur, have
threatened a wasteful and disruptive proxy contest. THEIR STATED GOAL IS TO
TAKE CONTROL OF YOUR COMPANY.
MESSRS. DENTON AND WYSER-PRATTE, ALTHOUGH SEEMINGLY IN AGREEMENT WITH THE
VAST MAJORITY OF THE ELEMENTS IN OUR STRATEGIC PLAN, HAVE ATTACKED THE COMPANY
BASED ON ERRONEOUS CONCLUSIONS ABOUT COMSAT'S STRATEGY AND PERFORMANCE. THE
DISSIDENTS ALSO DRAW ERRONEOUS CONCLUSIONS ABOUT COMSAT'S BOARD, AND THEY
DISPLAY A SIGNIFICANT MISUNDERSTANDING OF COMSAT AND ITS BUSINESS. FOR
EXAMPLE:
. The dissidents criticize the Board for a "lack of commercial management
experience." They are wrong. Seven of the 11 elected non-employee Board
members have public-company senior management experience, consistent with
the peer group to which the dissidents compare COMSAT. Given COMSAT's
unique nature, with its statutory obligations under U.S. law and its high
level of regulation by the FCC, it is well served by also having Board
members with experience in government and business.
. The dissidents criticize the Company's commitment to expand COMSAT
International, which provides satellite-based network services in emerging
markets. This business, still in the early development stage, has grown
significantly, from revenues of $2 million in 1992 to $58 million in 1996.
Rather than being a cash drain, as they assert, it will become
<PAGE>
operating cash-flow positive in 1997. It is not the speculative venture-
capital investment they want you to believe. In fact, the majority of
capital invested at COMSAT International is based on signed customer
contracts. We have current long-term revenue commitments of more than
$240 million. We are convinced that this business will generate
significant returns and provide the Company with its greatest vehicle for
growth and value creation. Moreover, it is a natural extension of COMSAT's
capabilities in satellite transmission--making optimal use of our
outstanding reputation, customer relationships and technological know-how.
. The dissidents question our decision to pursue a tax-free spin-off of
Ascent to shareholders. The fact is, in the absence of an opportunity to
sell Ascent on terms that deliver appropriate shareholder value, this
approach preserves Ascent's upside potential, gives shareholders
discretion over the future of their investment in Ascent, and avoids the
possibility of double taxation.
. The dissidents accuse COMSAT of a "delay" in pursuing non-dominant status.
To the contrary, COMSAT has aggressively pursued regulatory reform at the
FCC since 1992. In the meantime, we achieved several meaningful rulings
which, coupled with the advent of increased competition, have set the
stage for the FCC to act favorably on our current petition to deregulate
COMSAT. Your management team has designed a strategy to achieve this
result.
WE CAUTION OUR SHAREHOLDERS ABOUT THE OBJECTIVES OF THESE SPECULATIVE
INVESTORS, WITH THEIR RECORDS OF WAGING OR THREATENING TO WAGE PROXY CONTESTS
AGAINST NUMEROUS OTHER COMPANIES. We seriously question their purpose, as
should you, and we strongly believe that any proxy contest would be long,
costly and highly disruptive of our efforts to implement our strategic plan.
WE ARE FIRMLY CONVINCED THAT THIS CORPORATION, UNDER NEW MANAGEMENT LEADERSHIP
AND WITH A NEW STRATEGIC PLAN, IS PURSUING THE MOST EFFECTIVE COURSE OF ACTION
FOR ALL SHAREHOLDERS. THIS MANAGEMENT TEAM HAS THE ESSENTIAL BUSINESS,
TECHNICAL AND REGULATORY EXPERIENCE FOR THE CONTINUED SUCCESS OF YOUR COMPANY.
Our success in implementing this plan will enhance the value of your
investment.
We have embarked upon a new era at COMSAT, focused on businesses that serve
the growing demand for telecommunications. We pledge to you our commitment to
increase shareholder value. As we implement our strategic business plan, we
ask for your continued support.
Sincerely,
LOGO
Betty C. Alewine
President and Chief Executive Officer
<PAGE>
COMSAT Corporation ("COMSAT") and certain persons named below may be deemed
to be "participants" in a proxy solicitation within the meaning of Regulation
14A under the Securities Exchange Act of 1934. The participants in this
solicitation may include the directors of COMSAT (Betty C. Alewine, Lucy
Wilson Benson, Edwin I. Colodny, Lawrence S. Eagleburger, Neal B. Freeman,
Arthur Hauspurg, Caleb B. Hurtt, Peter S. Knight, Peter W. Likins, Howard M.
Love, Charles T. Manatt, Robert G. Schwartz, and Dolores D. Wharton); the
following executive officers of COMSAT (Janet L. Dewar, Allen E. Flower, Paul
G. Pizzani and Warren Y. Zeger); and the following other employees of COMSAT
(Gary S. Sharpe and Charles H. Taylor, Jr.). As of March 1, 1997, Betty C.
Alewine, Allen E. Flower and Warren Y. Zeger beneficially owned 321,301
shares, 70,276 shares and 179,979 shares of COMSAT, respectively (including
shares subject to stock options exercisable within 60 days). The remaining
participants do not beneficially own, individually or in the aggregate, in
excess of 1% of COMSAT's equity securities.
