SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Rule 14a-101
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Coastal Physician Group, Inc.
_______________________________________________________
(Name of registrant as specified in its charter)
Steven M. Scott, M.D.
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(Name of Person(s) Filing Proxy Statement)
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TO: Coastal Physician Institutional Shareholders
Re: ISS Report
A few observations regarding the report put out
by Peter Gleason of Institutional Shareholder Services
(ISS) on September 19:
1. Mr. Gleason says on page 10 "The proxy
contest presents Coastal shareholders with a difficult
decision." He's right. This contest is not shaped by
personalities but by legitimate issues as to future
direction, whether and when to sell the whole company,
and whether to sell off individual assets.
2. Mr. Gleason's analysis is not superficial
and he correctly considers debt repayment issues. Where
he errs is that he focuses on the wrong debt repayment
date. The $40 million due in January 1997 can be repaid
under any scenario. The sale of the Maryland clinic
operations announced earlier this week nets about $17
million in cash and selected other assets can easily be
sold for the balance.
3. The much more difficult problem is next
summer, when a larger debt repayment is due. That's what
Mr. Gleason did not focus on. To make those payments,
heavy asset sales will be needed and the assets that
remain will not be highly valued by any potential
purchasers. Who knows what Coastal's stock will trade at
by then. Clearly, as Mr. Gleason says, Coastal needs to
address the debt repayment obligations, but it also needs
to retain an investment banker and move quickly to try to
find an overall solution -- certainly before next summer.
4. I don't think there will be any "second
chances" for shareholders. Shareholders are prohibited
from calling special meetings to vote on directors or
anything else. Once this meeting is over, no changes can
be made in the Board until the 1997 shareholders' meeting
which Coastal need not hold until the end of next year.
Steven M. Scott, M.D.
September 20, 1996
