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Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
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[X] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Coastal Physician Group, Inc.
(Name of Registrant as Specified in its Charter)
Steven M. Scott, M.D.
(Name of Person Filing Proxy Statement)
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STEVEN M. SCOTT, M.D.
3711 Stoneybrook Drive o Durham, North Carolina 27705
September 19, 1996
Dear Fellow Shareholder:
With the Coastal Physician Group, Inc. Shareholders' Meeting now only about
a week away, I am writing one last time to ask you to join with me in urging the
Board of Directors to take prompt action to maximize the value of all of our
Coastal shares. This Shareholders' Meeting on September 27 may be our last
opportunity for a long time to let Coastal's Board and management know what we
want them to do. Our message should be clear and unambiguous:
o TAKE PROMPT ACTION TO MAXIMIZE SHAREHOLDER VALUE NOW.
o GIVE IMMEDIATE CONSIDERATION TO SELLING COASTAL IN ITS ENTIRETY.
o It's time for Coastal's management and Board to stop talking about
"pursuing all available alternatives" -- something that could go on
endlessly -- while management continues to be compensated handsomely.
o Do whatever is necessary to REDUCE THE FINANCIAL BURDEN of paying up to a
total of $6,000,000 A YEAR to Coastal's three senior officers -- all of
whom sit on Coastal's Board of Directors -- and an outside consulting
firm.
LONG ON TALK -- SHORT ON ACTION
When Coastal's management tells you "we are extremely pleased with our
progress so far and we look forward to sharing our ongoing results with you in
the weeks ahead" -- PRESUMABLY AFTER THE VOTE ON SEPTEMBER 27 -- I ask you to
consider the following:
1. At a time when Coastal's management talks a lot about its various plans
to sell assets, seek an equity infusion or even consider a sale of the
entire company, THE FACT IS THAT COASTAL HAS BEEN WITHOUT AN OUTSIDE
FINANCIAL ADVISOR SINCE MORGAN STANLEY & CO. RESIGNED ITS ENGAGEMENT IN
MID-AUGUST -- MORE THAN FIVE WEEKS AGO. More than FOUR WEEKS have now
gone by since Coastal publicly announced its intention to engage a new
investment banker as its "lead financial advisor" to replace Morgan
Stanley.
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2. Since Coastal announced on July 9, 1996 its "comprehensive financial and
strategic plan" to dispose of certain "non-strategic assets", IT HAS
DISPOSED OF NO ASSETS, except that earlier this week Coastal announced
it had entered into an agreement to sell certain assets of its Maryland
clinic operations. This, in fact, is a transaction that was initiated
in early 1996, long before Coastal announced its non-strategic asset
disposition plan in early July -- and I believe it can hardly be char-
acterized as an achievement of current management in furtherance of its
asset divestiture plan. IN MY VIEW, THE MOST NOTABLE THING ABOUT THIS
TRANSACTION IS HOW LONG IT HAS TAKEN FOR MANAGEMENT TO GET IT DONE.
3. On the last trading day before Coastal announced its pending sale of
certain assets of the Maryland clinic operations, Coastal stock closed
at $6 7/8. On September 16, 1996, the day of the announcement, Coastal
stock fell by more than 5%. By September 18, 1996, Coastal stock
declined even further to $5 7/8 -- A TOTAL DECLINE OF MORE THAN 14% IN
THE THREE DAYS FOLLOWING THIS ANNOUNCEMENT.
4. In Coastal's September 16 press release, its President and Chief
Executive Officer was quoted as stating: "We intend to continue on our
aggressive path toward revitalizing the Company through the sale of
certain assets, while simultaneously improving Coastal's core operations
and evaluating strategic alternatives to maximize shareholder value." IT
IS APPARENT TO ME THAT THE MARKETPLACE DID NOT REACT FAVORABLY TO THIS
ANNOUNCEMENT THAT COASTAL IS CONTINUING TO PURSUE ITS PIECEMEAL ASSET
SALE PROGRAM.
While I fully expect to hear Coastal's management talk more about its various
plans in the final days of this proxy contest, I see no evidence AT ALL that
Coastal's Board and management are prepared to move forward to successfully
maximize shareholder value once the September 27 Shareholders' Meeting has come
and gone.
IT'S TIME TO ACT NOW!
In a recent letter to you, Coastal's management asserted "it's time to give
our approach for Coastal a chance through the continuation of our comprehensive
plan." I DON'T THINK THAT WE, AS SHAREHOLDERS, SHOULD RISK TAKING A CHANCE WHILE
WE WAIT FOR MANAGEMENT'S FUTURE PLANS TO PLAY OUT OVER AN INDETERMINITE PERIOD
OF TIME -- nor do I believe we can rely on management to show the will and
determination to make the hard choices necessary to maximize the value of our
investment now.
2
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I have said repeatedly that I believe prompt action is needed, and that
Coastal and its shareholders cannot wait while management pursues its
non-strategic asset disposition plan. Here is what an independent publication,
Mergers & Acquisitions Report, recently said in an article titled "TIME RUNNING
OUT FOR COASTAL":*
"Most analysts have stopped covering Coastal Physician
Group Inc. as the company labors to overcome a variety of
problems and raise funds to cover a big bank debt within the
next four months. * * *
The cessation of coverage reflects the deep problems
faced by this diverse medical-services business, which is
headquartered in Durham, N.C."
I, too, believe that time may be running out for Coastal, and I and my two
nominees believe that prompt consideration should be given to a sale of Coastal
in its entirety.
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I know that during the past month you have received numerous mailings both
from Coastal and from me. These letters are typical in a proxy contest, since it
is you -- Coastal's shareholders -- who are being asked to make a key decision
about the future of your investment in Coastal. It is also important for Coastal
that this contest be brought to a conclusion and that the Shareholders' Meeting
be held, as scheduled, on September 27, with no postponement or delay.
Time is short and it is important that your shares be voted, no matter how
many or how few shares you own. Please vote today on the enclosed BLUE proxy
card. Once again, I thank you for your careful attention to the issues, and for
your consideration and support throughout this proxy contest.
Sincerely,
/s/ Steven M. Scott, M.D.
Steven M. Scott, M.D.
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* Article by Mark S. Porter, Mergers & Acquisitions Report, Vol. 9, No. 38,
September 16, 1996. Dr. Scott has neither sought nor obtained permission from
the author or the publication for the use of such material in connection with
his solicitation of proxies.
3
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If your shares of Common Stock are held in the name
of a bank or brokerage firm, only that firm can execute
a proxy card on your behalf. Please contact the person
responsible for your account and give instructions for a
BLUE PROXY CARD TO BE VOTED FOR PROPOSALS 1, 2 AND 4
AND AGAINST PROPOSAL 3.
Do not sign any white proxy card you may receive from Coastal,
even as a protest vote against Coastal's Board and management.
If you have questions or need assistance in voting your shares, please
contact the firm assisting me in the solicitation of proxies:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
TOLL FREE: 1-800-223-2064
BANKS & BROKERS CALL: 212-440-9800
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DO NOT SIGN OR RETURN ANY WHITE PROXY CARD
SENT TO YOU BY COASTAL'S MANAGEMENT OR BOARD OF DIRECTORS
1. Do NOT sign any white proxy cards even as a protest vote against
Coastal's Board and management. Execution of a white proxy card will
revoke any BLUE proxy card you previously sent to Dr. Scott.
2. You can vote 'FOR' Dr. Scott's two nominees ONLY on the BLUE proxy
card. Checking the 'withhold authority' box on Coastal's white proxy
card will NOT be counted as a vote in favor of Dr. Scott's nominees.
3. If you previously signed and returned a white proxy card, or think
you may have done so, you have every right to change your mind. Only
your latest date proxy card will count. You may revoke any earlier
white proxy card returned to Coastal by signing, dating and mailing
the enclosed BLUE proxy card in the postage-paid envelope provided.
If you have questions or need assistance in voting your shares, please contact
the firm assisting me in the solicitation of proxies:
GEORGESON & COMPANY, INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
TOLL FREE: 1-800-223-2064
BANKS & BROKERS CALL: 212-440-9800
Steven M. Scott, M.D.
September 19, 1996
