SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
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[ ] 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)
Coastal Physician Group, Inc.
(Name of Person(s) Filing Proxy Statement)
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change Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
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COASTAL PHYSICIAN GROUP, INC.
2828 Croasdaile Drive
Durham, North Carolina 27705
September 23, 1996
DEAR SHAREHOLDER:
OUR TURNAROUND PLAN IS MOVING FORWARD.
In the past week, your Company's management has:
- Signed a definitive agreement to sell Coastal's
Physicians Planning Group, Inc. to an affiliate of
Helix Health, Inc., Maryland's largest integrated
health care delivery system. Most of the $17 million
in net proceeds to Coastal will be used to reduce
debt.
- RECEIVED A RECOMMENDATION FROM INSTITUTIONAL SHARE-
HOLDER SERVICES, INC. THAT COASTAL SHAREHOLDERS
SHOULD VOTE FOR MANAGEMENT'S SLATE -- NOT DR. SCOTT'S
-- IN THE PROXY CONTEST. ISS IS A LEADING INDEPEN-
DENT SHAREHOLDER ADVISORY FIRM. PLEASE SEE OUR PRESS
RELEASE ABOUT ISS ON THE BACK OF THIS LETTER.
- ENGAGED SMITH BARNEY, INC. -- A LEADING INTERNATIONAL
INVESTMENT BANK -- TO BE LEAD FINANCIAL ADVISOR IN
OUR CONTINUING EFFORTS TO SELL THE COMPANY.
Meanwhile, Dr. Scott continues to complaint about and
question your management's ability to sell all or parts of the
Company, reduce debt and retain a financial advisor to help us
accomplish these objectives.
Dr. Scott is obviously wrong. YOUR MANAGEMENT IS TAKING
DECISIVE ACTION, WHILE DR. SCOTT MERELYCONTINUES GENERATING HIS EMPTY
RHETORIC. But, then, Scott may be getting desperate for votes
-- his nominees and limited approach were soundly rejected by
ISS in favor of your management's slate and comprehensive plan
to restore value for shareholders.
REMEMBER -- YOU NO LONGER HAVE TO RELY ONLY ON OUR WORD TO
VOTE FOR MANAGEMENT. COASTAL'S MANAGEMENT HAS WON THE ENDORSE-
MENT OF PERHAPS THE WORLD'S LEADING SHAREHOLDER ADVISORY FIRM.
A number of our large institutional shareholders are ISS cli-
ents and will follow ISS's recommendation. We think you should
too.<PAGE>
IT'S NOT TOO LATE TO CHANGE YOUR VOTE, BUT YOU MUST ACT
TODAY!
In an election contest, only your latest dated card will
count. Therefore, even if you have already voted for Dr.
Scott's nominees on his BLUE proxy card, you have every legal
right to change your mind and vote for Coastal's nominees on
the enclosed WHITE management card. Our September 27 annual
meeting is just days away. To make sure your vote is received
in time you must promptly return the WHITE management card in
the enclosed overnight express envelope. Please do so today!
If you have any questions about casting your vote in time,
please call MacKenzie Partners, Inc., toll-free at (800) 322-
2885 to help you.
We thank you for your encouraging comments and continuing
support.
Sincerely yours,
/s/ Jacque J. Sokolov /s/ Joseph G. Piemont
Jacque J. Sokolov, M.D. Joseph G. Piemont
Chairman of the Board President and Chief
Executive Officer<PAGE>
NEWS RELEASE
FOR IMMEDIATE RELEASE
INDEPENDENT SHAREHOLDER ADVISORY FIRM ENDORSES
MANAGEMENT IN COASTAL PHYSICIAN GROUP PROXY CONTEST
DURHAM, NC, SEPTEMBER 20, 1996 -- Coastal Physician Group,
Inc. (NYSE:DR) announced today that Institutional Shareholder
Services, Inc. has recommended that its clients vote for the
Coastal management slate of directors at the Coastal Physician
Group Annual Meeting of Shareholders scheduled for next Friday,
September 27, at 9:00 a.m. local time.
Institutional Shareholder Services (ISS), based in Be-
thesda, Maryland, is a leading independent advisor to several
hundred institutional investors in the areas of proxy contests,
corporate governance and other shareholder-related issues.
ISS published its report on September 19 following a face-
to-face meeting with the former CEO of Coastal, Dr. Steven
Scott, his nominees to the board and another former Coastal ex-
ecutive, during which time they had the opportunity to express
their views regarding Coastal. ISS also interviewed Coastal
Chief Executive Joseph Piemont and other senior Coastal execu-
tives.
The ISS report states that "we believe the strategic plan
set forth by management is necessary to maintain Coastal as a
viable entity given the company's financial position."
ISS goes on to say, "...we believe the sale of assets is
necessary to service the impending debt payment, and the forti-
fication of the company's core assets will benefit the company
in the long run ... Because management is open to the pos-
sibility of a sale of the entire company, we believe that its
strategy ... will help the company avoid default on its debt
obligations and enhance the position of Coastal ..."
The report concludes, "we recommend that shareholders vote
in favor of management's nominees to the board."
Jacque J. Sokolov, M.D., Coastal Physician Group's Chair-
man of the Board, commented: "We are pleased that ISS has en-
dorsed our plans to elect directors committed to the continued
implementation of our comprehensive plan, which we believe is
only enhancing the value of our organization by reducing our
indebtedness and improving the operation of our businesses. If
re-elected, our nominees look forward to working with the<PAGE>
Coastal management team in order to maximize value in the near
term for all Coastal shareholders."
Coastal Physician Group, Inc. is a diversified physician
management company providing a broad range of health care and
administrative services to physicians, hospitals, employers,
managed care programs and other health care providers.
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