Satellite giant Comsat Corp. said it “questions the reasoning” behind the proxy fight that has been launched by two of its investors.
Guy Wyser-Pratte and Herbert Denton/Providence Capital claim the company’s financial performance has been “abysmal.” Combined, the two men, their companies, partners, officers and employees own 2.74 percent of Comsat.
“The company currently faces capital constraints, negative operating cash flow, a leveraged balance sheet reliant upon risky short-term borrowings and now, a dividend which may be cut or eliminated,” they stated.
Comsat reported a net loss of $11.5 million for the fourth quarter 1996, or a loss of 24 cents per share. Comsat announced last year plans to return the company’s focus back to its core business, satellite communications.
“Comsat has been meeting around the country with our shareholders to discuss the new strategic plan, parts of which have been underway since the fourth quarter,” said Janet Dewar, Comsat’s vice president of corporate affairs.
The Bethesda, Md.-based company just received a copy of the preliminary complaint filed with the Securities and Exchange Commission; the discontented investors seek a special meeting of the shareholders, where they will present two Shareholder Democracy proposals.
“Naturally, we offered to sit down with the shareholders who have filed this and talk about their concerns. Indeed, one of them is a company that our senior management met with,” Dewar said.
“They have apparently decided to embark on a course of action that will be long and costly for all concerned, and could interfere with the execution of the [refocusing] plan,” she said.
Comsat intends to sell or spin off Ascent Entertainment, and hopes to sell by the end of this year its assets and operators of Comsat RSI Inc., which designs, manufactures and integrates Earth stations as well as wireless and advanced antenna systems.
Guy Wyser-Pratte and New York-based Wyser-Pratt Co. hold stock representing about 2.56 percent of Comsat. Including the holdings of Providence Capital Inc. of New York City, the objecting investors own about 2.74 percent of Comsat.
