SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box:
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14a-6(e)(2))
{_} Definitive Proxy Statement
{_} Definitive Additional Materials
{X} Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COMSAT CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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FROM: COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
PHONE: 301 214 3442
FAX: 301 214 7130
DATE: April 24, 1997
For Immediate Release
COMSAT SUES FORMER CEO BRUCE CROCKETT, HERBERT DENTON, PROVIDENCE CAPITAL AND
WYSER-PRATTE, INC.
Bethesda, Md. -- COMSAT Corporation (NYSE:CQ) filed suit yesterday against
its former chief executive officer, Bruce L. Crockett, alleging a conspiracy
linking him with Herbert Denton, Providence Capital, Inc. and Wyser-Pratte,
Inc., who have threatened COMSAT with a proxy contest.
Also named as defendants are two entities that Denton and Wyser-Pratte are
using in their proxy effort, Providence Capital, Inc. and Providence
Investors, L.L.C., and a number of unidentified "John Does 1-15" with whom
they are allegedly aligned.
COMSAT's suit charges that the defendants' activities violate the
Communications Satellite Act of 1962, a federal statute governing COMSAT,
as well as a 1996 Termination Agreement in which Crockett agreed with
COMSAT not to disparage, compete with or disclose confidential information
about COMSAT to third parties.
The Complaint, filed in the Virginia federal district where Crockett
resides, reveals heretofore undisclosed aspects of the reasons for
Crockett's July 1996 departure from COMSAT. It alleges that Crockett
resigned to avoid an imminent firing by the Board for several causes.
Listed in the Complaint are the failure of his diversification strategy,
which has been the source of most of the criticism COMSAT now faces from
shareholders who are threatening a proxy contest. Other reasons alleged are
Crockett's violation of COMSAT policy in the course of efforts to make the
stock more attractive to speculative investors and his virtual abandonment
of his managerial duties at COMSAT.
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COMSAT Sues For Conspiracy -- Page 2
The Complaint states that COMSAT's Board, in order to implement a smooth
restructuring of COMSAT back to its core communications business, agreed in
a termination agreement to provide Crockett with payments and other
benefits in exchange for Crockett's agreement not to injure the corporation
by leaking confidential information, by joining with competitors or by
disparaging the corporation and its leadership.
According to the Complaint, Crockett has violated those agreements,
motivated by over $2 million in potential profits from a change of control
at COMSAT, by promises of help from the other defendants in securing future
employment, as well as by a desire for retribution. In these activities, he
is alleged to be working with Denton, Wyser-Pratte, Inc. and the Providence
defendants, who are described as fronts for a larger unidentified group
whose purpose allegedly is generating short-term, speculative profits by
creating turmoil among COMSAT's shareholders by threatening a proxy contest
for control of COMSAT.
The Complaint asserts that Denton's only experience with a business like
COMSAT was with a Russian communications venture that attempted to compete
with a COMSAT company and went bankrupt in 1996. After that bankruptcy, the
Complaint asserts, Denton and his alleged co-conspirators returned to their
earlier business of attempting to profit by trying to drive up the
short-term price of COMSAT's stock in an effort to turn a quick profit for
themselves and others by creating market turmoil, including threatening a
proxy contest. The Complaint alleges that they are acting in concert with a
number of other, similarly motivated investors in violation of unique
limits on ownership of more than 10% of the securities of COMSAT, a
provision of the federal Communications Satellite Act of 1962, pursuant to
which COMSAT was created and is regulated. This is alleged to constitute
both tortious interference with Crockett's termination agreement with
COMSAT and a conspiracy to violate both that contract and the
Communications Satellite Act. In the Complaint, COMSAT seeks over $20
million in damages, which can be trebled under applicable conspiracy law,
and injunctive relief, against all defendants, jointly and severally.
COMSAT Corporation (NYSE: CQ) is a global provider of communications
services and products.
- -- more --
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COMSAT Sues For Conspiracy -- Page 3
COMSAT Corporation ("COMSAT") and certain persons named below may be deemed
to be "participants" within the meaning of Regulation 14A under the Securities
Exchange Act of 1934. The participants in this solicitation may include the
directors of COMSAT (C.J. Silas, 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 and Warren Y.
Zeger beneficially owned 321,301 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.
# # #
CONTACT: Andrew Baer/Ruth Pachman Kekst and Co. (212) 593-2655
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