SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9/A
(Amendment No. 4)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------------
COMSAT CORPORATION
(Name of Subject Company)
COMSAT CORPORATION
(Name of Person(s) Filing Statement)
Common Stock, without par value
(Title of Class of Securities)
20564D107
(CUSIP Number of Class of Securities)
Warren Y. Zeger, Esq.
Vice President, General Counsel and Secretary
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817
(301) 214-3200
(Name, address and telephone number of person authorized to receive
notice and communication on behalf of the person(s) filing statement).
With a Copy to:
Alan C. Myers, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
(212) 735-3000
This Amendment No. 4 to the Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") of COMSAT Corporation, a District of
Columbia corporation (the "Company") amends and supplements the Schedule
14D-9 of the Company relating to the tender offer (the "Offer") by Regulus,
LLC, a single member Delaware limited liability company (the "Purchaser")
and a wholly-owned subsidiary of Lockheed Martin Corporation, a Maryland
corporation ("Parent"), disclosed in a Tender Offer Statement on Schedule
14D-1, dated September 25, 1998, as amended, to purchase up to 49% (less
certain adjustments) of the issued and outstanding shares of common stock,
without par value, of the Company (the "Shares") at a price of $45.50 per
Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated
September 25, 1998 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together with the Offer to Purchase constitute the
"Offer"). Capitalized terms not defined herein have the meanings assigned
thereto in the Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
Item 3(b) is hereby amended and supplemented by the addition of the
following paragraphs thereto:
The paragraphs added to Item 3(b) pursuant to Amendment No. 3 to the
Schedule 14D-9 filed with the Securities and Exchange Commission on April
22, 1999 are deleted in their entirety and replaced with the following:
Parent has a continuing engagement with the law firm of Wunder,
Knight, Levine, Thelen & Forscey to provide general legislative support.
Under this engagement, Peter S. Knight, a Presidentially- appointed
director of the Company since September 1994 and partner of Wunder Knight,
has rendered services to Parent. Parent paid Wunder Knight $54,716,
$161,669, $112,129, $135,325 and $151,370 for services rendered and
expenses incurred during 1999 (through June 1), 1998, 1997, 1996 and 1995,
respectively. Mr. Knight recused himself from the deliberations relating to
the determination by the Board of Directors on July 7, 1999 to reconfirm its
recommendation that shareholders approve the Merger Agreement.
Parent also has a continuing engagement with the law firm of Manatt,
Phelps & Phillips, LLP to provide general legal and legislative advocacy
services in connection with government contracts and contracting
opportunities in the state of California. Under this engagement, Charles T.
Manatt, a Presidentially-appointed director of the Company since May 1995
and chairman of Manatt Phelps, has not rendered any services to Parent.
Parent paid Manatt Phelps $24,078, $65,414, $116,113, $153,126 and $66,686
for services rendered and expenses incurred during 1999 (through June 1),
1998, 1997, 1996 and 1995, respectively.
Standard Technology, Inc., a technology, engineering and systems
integration firm, has provided services to Parent under various contracts,
which resulted from arm's-length negotiations, in connection with a
Department of Defense mentor-protege program to encourage large defense
contractors to subcontract with minority-owned businesses. Kathryn C.
Turner, a director of the Company since August 1997, is the Chairperson,
Chief Executive Officer and sole shareholder of Standard Technology. Parent
paid Standard Technology $949,803, $1,807,711, $2,008,766, $1,846,662 and
$2,242,126 in 1999 (through June 1), 1998, 1997, 1996 and 1995,
respectively, under those contracts. Pursuant to the mentor- protege
program, Parent agreed to award Standard Technology with a targeted amount
of $1 million of contracts per year through 2001. Pursuant to the
mentor-protege program, Parent also participates on an ad hoc advisory
board which provides guidance on business matters and has provided
financial assistance to Standard Technology. Parent has made an unsecured
loan to Standard Technology, which is repayable over a fifteen year period
commencing upon the earlier of 2007 or the year after Standard Technology
achieves annual revenues in excess of $25 million. As of June 1, 1999, the
outstanding balance of the loan was $2,632,166, which includes previously
capitalized interest. Interest does not currently accrue on the loan but
will accrue at 8% per annum on the unpaid principal amount once repayment
is required. In addition, Parent has guaranteed up to $2 million of
Standard Technology's borrowings under a line of credit with a commercial
bank, which also is secured by Standard Technology's accounts receivable
and a personal guarantee by Ms. Turner. Ms. Turner recused herself from the
deliberations relating to the determination by the Board of Directors on
July 7, 1999 to reconfirm its recommendation that shareholders approve the
merger agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4(a) is hereby amended and supplemented by the addition of the
following:
The first paragraph of Item 4(a) is deleted in its entirety and
replaced with the following:
On September 18, 1998, the Board of Directors of the Company, by a
unanimous vote (excluding four Directors who either were absent or recused
themselves) approved the Offer, the Merger and the Merger Agreement and
determined that the terms of each of the Offer, the Merger and the Merger
Agreement are consistent with, and in furtherance of, the long-term
business strategy of the Company and are fair to the Company's
shareholders. In addition, the Board of Directors recommended that the
Company's shareholders accept the Offer and tender their shares of Company
Common Stock pursuant to the Offer. On July 7, 1999, the Board of Directors
reconfirmed its recommendation by unanimous vote, excluding five directors
who recused themselves. This recommendation is based in part upon the
opinions the Board of Directors received from Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), to the effect that, as of September 18,
1998, and as of July 7, 1999, the Consideration to be received by the
Company's shareholders pursuant to the Merger Agreement was fair to such
shareholders from a financial point of view (each a "DLJ Fairness
Opinion"). The full text of the DLJ Fairness Opinion, dated as of July 7,
1999, which sets forth the factors considered and the assumptions made by
DLJ, is attached hereto as Annex A and filed as Exhibit 25 hereto.
Shareholders are urged to read the DLJ Fairness Opinion, dated as of July
7, 1999, in its entirety.
Paragraph (2) of Item 4(b) is deleted in its entirety and replaced
with the following:
(2) the presentations of DLJ and the DLJ Fairness Opinions that, as
of September 18, 1998 and as of July 7, 1999, the Consideration to be
received by COMSAT shareholders pursuant to the Merger Agreement was fair
to such shareholders from a financial point of view;
Paragraph (6) of Item 4(b) is deleted in its entirety and replaced
with the following:
(6) the potential for legislative action that could significantly and
adversely harm the Company's core businesses and the value of its
shareholders' investments;
Prior to the last paragraph of Item 4(b), the following shall be
inserted:
Before reconfirming its recommendation to shareholders on July 7,
1999, the Board of Directors reviewed the factors that it considered
originally in approving the Merger Agreement. The Board of Directors
concluded that the factors continue to apply and continue to support the
Board of Director's recommendation.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Item 5 is hereby amended and supplemented by the addition of the following:
The second to last sentence of the last paragraph of Item 5 is
deleted in its entirety and replaced with the following:
The Company estimates that an Additional Fee of approximately $5.9
million would have been payable to DLJ if the Offer and the Merger were
consummated as of July 7, 1999.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 25 Opinion of Donaldson, Lufkin & Jenrette Securities Corporation
dated as of July 7, 1999.*
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 15, 1999 COMSAT Corporation
By: /s/ Alan G. Korobov
-----------------------------------
Name: Alan G. Korobov
Title: Controller
Annex A is deleted in its entirety and replaced with the following:
Annex A
DONALDSON, LUFKIN & JENRETTE
Donaldson Lufkin & Jenrette Securities Corporation
277 Park Avenue, New York, New York, 10172 - (212) 892-3000
As of July 7, 1999
Board of Directors
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial
point of view, to the stockholders of COMSAT Corporation (the "Company") of
the Consideration (as defined below) to be received by such stockholders
pursuant to the terms of the Agreement and Plan of Merger, dated as of
September 18, 1998 (the "Agreement"), among Lockheed Martin Corporation
("Lockheed Martin"), DENEB Corporation ("DENEB"), a wholly owned subsidiary
of Lockheed Martin, and the Company, pursuant to which the Company will be
merged with and into DENEB (or, if certain conditions in the Agreement are
not satisfied, DENEB will be merged with and into the Company)(the
"Merger").
Pursuant to the Agreement, Lockheed Martin, through a wholly owned,
single member Delaware limited liability company ("Offer Subsidiary"),
commenced on September 25, 1998 a cash tender offer (the "Tender Offer")
for up to the number of shares of the Company's common stock, without par
value (the "Company Common Stock"), that is equal to the remainder of (i)
49% of the number of shares of Company Common Stock outstanding at the
close of business on the date of purchase pursuant to the Tender Offer
minus (ii) the number of shares of Company Common Stock then owned of
record by "authorized carriers" (as defined in the Communications Satellite
Act of 1962, as amended) as evidenced by issuance of shares of Series II
Company Common Stock minus (iii) the number of shares of Company Common
Stock with respect to which written demand shall have been made and not
withdrawn under the District of Columbia Business Corporation Act
("Dissenting Shares"), at a price of not less than $45.50 per share, net to
the seller in cash (the "Tender Offer Consideration").
Pursuant to the Agreement, subsequent to the Tender Offer and subject
to the satisfaction of the conditions contained in the Agreement, the
Company shall be merged with and into DENEB (or, if certain conditions in
the Agreement are not satisfied, DENEB shall be merged with and into the
Company) and each share of Company Common Stock issued and outstanding
(other than shares of Company Common Stock held in the treasury of the
Company, held by Offer Subsidiary, held by Lockheed Martin, if any, and
Dissenting Shares) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive 1.0
(the "Exchange Ratio") share of Lockheed Martin Common Stock, par value $1
per share (the "Lockheed Martin Common Stock")(the "Merger Consideration").
The Exchange Ratio reflects the two-for-one stock split of the Lockheed
Martin Common Stock effected on December 31, 1998. The Tender Offer
Consideration and the Merger Consideration are collectively referred to as
the "Consideration" and the Tender Offer and the Merger are collectively
referred to as the "Transaction."
In arriving at our opinion, we have reviewed the Agreement and the
exhibits thereto, and the June 18, 1999 draft of the proxy
statement/prospectus relating to the Company's Annual Meeting of
Shareholders to be held in connection with the Merger. We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company and Lockheed Martin, including information
provided during discussions with their respective managements. Included in
the information provided during discussions with the Company's management
were certain financial projections of business units of the Company
prepared by the management of the Company. In addition, we have compared
certain financial and securities data of the Company with various other
companies whose securities are traded in public markets, reviewed the
historical stock prices and trading volumes of the respective common stocks
of the Company and Lockheed Martin and conducted such other financial
studies, analyses and investigations as we deemed appropriate for purposes
of this opinion. We were not requested to, nor did we, solicit the interest
of any other party in acquiring the Company.
In rendering our opinion, we have relied upon and assumed the accuracy
and completeness of all of the financial and other information that was
available to us from public sources, that was provided to us by the Company
and Lockheed Martin or their respective representatives, or that was
otherwise reviewed by us. With respect to the financial projections
supplied to us, we have assumed that they have been reasonably prepared on
the basis reflecting the best currently available estimates and judgments
of the management of the Company as to the future operating and financial
performance of the Company. We have not assumed any responsibility for
making any independent evaluation of any assets or liabilities of either
the Company or Lockheed Martin or for making any independent verification
of any of the information reviewed by us. We have also assumed that the
Tender Offer and the Merger and the other transactions contemplated by the
Agreement will be consummated as described in the Agreement. We have relied
as to certain legal matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, regulatory,
financial and other conditions as they exist on, and on the information
made available to us as of, the date of this letter. It should be
understood that, although subsequent developments may affect this opinion,
we do not have any obligation to update, revise or reaffirm this opinion.
We are expressing no opinion herein as to the prices at which Lockheed
Martin Common Stock will actually trade at any time. Our opinion does not
address the relative merits of the Transaction and the other business
strategies being considered by the Company's Board of Directors, nor does
it address the Board's decision to proceed with the Transaction. Our
opinion does not constitute a recommendation to any stockholder as to how
such stockholder should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part
of its investment banking services, is regularly engaged in the valuation
of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. DLJ has
performed investment banking and other services for the Company in the past
and has received customary compensation for such services.
Based on the foregoing and such other factors as we deem relevant, we
are of the opinion that, as of the date hereof, the Consideration to be
received by the stockholders of the Company pursuant to the Agreement is
fair to such stockholders from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Douglas V. Brown
-------------------------
Douglas V. Brown
Managing Director
DONALDSON, LUFKIN & JENRETTE
Donaldson Lufkin & Jenrette Securities Corporation
277 Park Avenue, New York, New York, 10172 - (212) 892-3000
As of July 7, 1999
Board of Directors
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial
point of view, to the stockholders of COMSAT Corporation (the "Company") of
the Consideration (as defined below) to be received by such stockholders
pursuant to the terms of the Agreement and Plan of Merger, dated as of
September 18, 1998 (the "Agreement"), among Lockheed Martin Corporation
("Lockheed Martin"), DENEB Corporation ("DENEB"), a wholly owned subsidiary
of Lockheed Martin, and the Company, pursuant to which the Company will be
merged with and into DENEB (or, if certain conditions in the Agreement are
not satisfied, DENEB will be merged with and into the Company)(the
"Merger").
Pursuant to the Agreement, Lockheed Martin, through a wholly owned,
single member Delaware limited liability company ("Offer Subsidiary"),
commenced on September 25, 1998 a cash tender offer (the "Tender Offer")
for up to the number of shares of the Company's common stock, without par
value (the "Company Common Stock"), that is equal to the remainder of (i)
49% of the number of shares of Company Common Stock outstanding at the
close of business on the date of purchase pursuant to the Tender Offer
minus (ii) the number of shares of Company Common Stock then owned of
record by "authorized carriers" (as defined in the Communications Satellite
Act of 1962, as amended) as evidenced by issuance of shares of Series II
Company Common Stock minus (iii) the number of shares of Company Common
Stock with respect to which written demand shall have been made and not
withdrawn under the District of Columbia Business Corporation Act
("Dissenting Shares"), at a price of not less than $45.50 per share, net to
the seller in cash (the "Tender Offer Consideration").
Pursuant to the Agreement, subsequent to the Tender Offer and subject
to the satisfaction of the conditions contained in the Agreement, the
Company shall be merged with and into DENEB (or, if certain conditions in
the Agreement are not satisfied, DENEB shall be merged with and into the
Company) and each share of Company Common Stock issued and outstanding
(other than shares of Company Common Stock held in the treasury of the
Company, held by Offer Subsidiary, held by Lockheed Martin, if any, and
Dissenting Shares) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive 1.0
(the "Exchange Ratio") share of Lockheed Martin Common Stock, par value $1
per share (the "Lockheed Martin Common Stock")(the "Merger Consideration").
The Exchange Ratio reflects the two-for-one stock split of the Lockheed
Martin Common Stock effected on December 31, 1998. The Tender Offer
Consideration and the Merger Consideration are collectively referred to as
the "Consideration" and the Tender Offer and the Merger are collectively
referred to as the "Transaction."
In arriving at our opinion, we have reviewed the Agreement and the
exhibits thereto, and the June 18, 1999 draft of the proxy
statement/prospectus relating to the Company's Annual Meeting of
Shareholders to be held in connection with the Merger. We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company and Lockheed Martin, including information
provided during discussions with their respective managements. Included in
the information provided during discussions with the Company's management
were certain financial projections of business units of the Company
prepared by the management of the Company. In addition, we have compared
certain financial and securities data of the Company with various other
companies whose securities are traded in public markets, reviewed the
historical stock prices and trading volumes of the respective common stocks
of the Company and Lockheed Martin and conducted such other financial
studies, analyses and investigations as we deemed appropriate for purposes
of this opinion. We were not requested to, nor did we, solicit the interest
of any other party in acquiring the Company.
In rendering our opinion, we have relied upon and assumed the accuracy
and completeness of all of the financial and other information that was
available to us from public sources, that was provided to us by the Company
and Lockheed Martin or their respective representatives, or that was
otherwise reviewed by us. With respect to the financial projections
supplied to us, we have assumed that they have been reasonably prepared on
the basis reflecting the best currently available estimates and judgments
of the management of the Company as to the future operating and financial
performance of the Company. We have not assumed any responsibility for
making any independent evaluation of any assets or liabilities of either
the Company or Lockheed Martin or for making any independent verification
of any of the information reviewed by us. We have also assumed that the
Tender Offer and the Merger and the other transactions contemplated by the
Agreement will be consummated as described in the Agreement. We have relied
as to certain legal matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, regulatory,
financial and other conditions as they exist on, and on the information
made available to us as of, the date of this letter. It should be
understood that, although subsequent developments may affect this opinion,
we do not have any obligation to update, revise or reaffirm this opinion.
We are expressing no opinion herein as to the prices at which Lockheed
Martin Common Stock will actually trade at any time. Our opinion does not
address the relative merits of the Transaction and the other business
strategies being considered by the Company's Board of Directors, nor does
it address the Board's decision to proceed with the Transaction. Our
opinion does not constitute a recommendation to any stockholder as to how
such stockholder should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part
of its investment banking services, is regularly engaged in the valuation
of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. DLJ has
performed investment banking and other services for the Company in the past
and has received customary compensation for such services.
Based on the foregoing and such other factors as we deem relevant, we
are of the opinion that, as of the date hereof, the Consideration to be
received by the stockholders of the Company pursuant to the Agreement is
fair to such stockholders from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Douglas V. Brown
-------------------------
Douglas V. Brown
Managing Director
