Two Comsat Corp. shareholders, seeking to boost the company's lagging stock price, plan to start a proxy fight to replace the directors of the satellite and telecommunications company.
Wyser-Pratte & Co. and Providence Capital Inc. filed a document with the Securities and Exchange Commission calling for a special meeting of shareholders to push Comsat to set its annual meeting immediately so shareholders can elect a new board. The shareholders also will propose eliminating restrictions on voting rights for investors owning more than 5 percent of Comsat.
The shareholders contend that management has held back growth of the Bethesda-based company by not pushing the Federal Communications Commission hard enough to deregulate its satellite operations, and by not expanding the company into new industries, including professional sports teams and a movie studio, at the expense of its core satellite business.
"The current board has done a wonderful job of squandering some wonderful assets," said Eric Longmire, director of research at Wyser-Pratte.
Wyser-Pratte beneficially owns 1.25 million shares, or about 2.56 percent of Comsat. Providence Capital beneficially owns 11,100 shares and options to buy another 40,000 shares. In 1996, Comsat's profit fell to $8.6 million, or 18 cents a share, from the $37.8 million, or 79 cents, it generated a year earlier. The company's stock has fallen 2.5 percent in the past 12 months, while the Dow Jones industrial average is up 18 percent. It closed yesterday at $24.375, up 12.5 cents.
Providence sent a letter to Comsat's board March 12 detailing its dissatisfaction with the company and its interest in replacing the board, Longmire said. Comsat spokeswoman Janet Dewar confirmed the the company received the letter.
"The new management team has developed a strategic plan that already incorporates most of their suggestions and addresses their criticisms," Dewar said.
Dewar said Comsat plans to file an official request with the FCC next month seeking deregulation of its satellite operations. Comsat's satellite business is a "dominant carrier," which means the company's profits are regulated by the government.
"Comsat's directors are not seasoned, entrepreneurial managers with public company experience," said Herbert Denton, president of Providence, and Guy Wyser-Pratte, president of Wyser- Pratte, in a statement.
Comsat decided last month to postpone its annual meeting that was set for next month. The company announced a restructuring at the time that will include selling a unit and focusing on its main satellite communications services and digital networking operations.
Dewar said the company is postponing the meeting "to give the management team a time to take these initial steps and demonstrate a fuller record of performance so they as shareholders have a better chance to look at the value of the company."
Pub Date: 4/09/97