Correctional Services Corporation Reports on Strategic Alternatives; Company Receives Notice of Exercise of Rights to Acquire Crowley and McLoud Contracts
SARASOTA, Fla.--(BUSINESS WIRE)--Aug. 23, 2000--Correctional Services Corporation (Nasdaq:CSCQ) announced today an update on its evaluation of strategic alternatives. After a thorough examination of possibilities and consultation with its advisors, the Company has determined that current capital market conditions are not conducive for a strategy that encompasses the sale of the Company. Consequently, the Company will focus its efforts on other business and financial strategies, including but not limited to share repurchase programs, the sale of non-operational real estate, acquisitions, business line extensions and other steps that will enhance shareholder's value.
James F. Slattery, Chairman and CEO, stated, "we believe the Company is very well positioned in both the adult and juvenile industries and our prospects are bright. We are committed to continuing our efforts to enhance the value of our shares."
In addition, CSC announced today that Dominion Management Group notified the Company of Dominions' decision to exercise its rights to acquire the contracts for the Crowley, Colorado and McLoud, Oklahoma facilities, as provided for under the terms of such contracts. In accordance with the notice of exercise, CSC expects to turnover the operations of the facilities to Dominion on or about December 20, 2000, at which time the contracts provide for the company to receive a lump sum payment of approximately $4 million.
CSC noted that its operations at the two facilities have been widely praised, with both facilities receiving their American Correctional Association accreditation last week with very high scores. ACA officials in their evaluation of the facilities conveyed accolades to CSC's management of the facilities and the quality of the programs. CSC has managed the McLoud and Crowley facilities since their inception in August and October of 1998, respectively.
In the latest quarter these facilities, collectively, provided less than $.01 per share in earnings to the Company and are currently running at a loss. This loss was expected to continue until there was a marked improvement in the population levels at the Crowley facility, which is currently running at a 55% occupancy rate.
Mr. Slattery also stated "we are proud of our accomplishments at both the Crowley and McLoud facilities. CSC has built an outstanding reputation for quality operations and this reputation was enhanced as a result of the superior services we provided at these facilities. Dominion's decision will not impair the Company's prospects in any way."
Through its Youth Services International subsidiary, Correctional Services Corporation is the nation's leading private provider of juvenile programs for adjudicated youths. In addition, the Company is a leading developer and operator of adult correctional facilities. On a combined basis, the company operates 49 facilities in 18 states and Puerto Rico which, including aftercare services, represents approximately 9,450 beds.
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