Contrary to the impression "Doc" Crants had given during last November's Road Show, HSBC's "$50 million per month" investment infusion of capital for PZN shares from its shelf registration did not commence, as we were led to believe it would, beginning in FY99 (and extending through FY00).
There are, I was informed, two reasons for this.
The first is that the shelf registration under which HSBC had been been making purchases of CCA shares (supposedly in the amounts of $7 million during September, and $13 million in each of the last 3 months of FY98) needed to be transferred to Prison Realty Corp. (PZN) on completion of the merger and approval of such from the SEC did not materialize until 1/15/99. The second reason, I learned, is that PZN apparently has the flexability to exercise some control over when (pricewise) it will sell shares to the the bank and why sell shares at currently depressed prices when that would tend to exacerbate the matter of earnings dilution?
While, last November, Doc had told of an investment of $600 million by HSBC in each of FYs '99 and '00, the talk now is $80 to $90 million in 1Q99. I was left with the impression that potential dilution due to 'low' share price is governing this revised investment schedule.
Be that as it may, in my quest to maintain statistical validity despite Market Guide's (MG) continuing to furnish BAD information to us here via Yahoo (don't even look at what they've done to PZN's Profile page), for those who even give a rat's --- about numbers, the following data might warm the cockles of your cerebrum.
Prison Realty Corp. began its new "merged" existence with a total of 105,272,182 (Basic) shares outstanding (S/O). This number was derived as follows:
CCA S/O a/o 12/31/98 = 91,379,203* x 0.875 = 79,956,802.
PZN S/O a/o 12/31/98 = 25,315,380.
79,956,802 + 25,315,380 = 105,272,182 S/O
* Note: The S/O currently being shown by Yahoo on PZN's Profile page is 84.2M. This rounded-off figure is the one you would've backed into had you taken the market-cap (MC) that MG had been providing to Yahoo FOR CCA over the course of CCA's last 5 weeks of existence as a public company, and divided it by the applicable share price. The fact that CCA ended up '98 with 91.4M S/O rather than the 84.2M that MG had been carrying since Thanksgiving week apparently couldn't matter less to MG. If your S/O multiplier is wrong, your MC's going to be commensurately wrong, too (as can be readily seen from PZN's Detail Quote on Yahoo).
PZN's S/O a/o 1/31/99 was 105,273,593, a gain of 1,411 shares for the month of January (due to employee stock purchase program buys).
If someone lurking who has listened to the 4Q98/FY98 CC heard Bob Crants answering Ann Anderson's question re: current S/O, tell her, "About 109 million.", he was talkin' S/O (Diluted) [for analysts' model constructing purposes] while we've been talkin' S/O (Basic).
On the basis of 105,273,593 S/O, PZN's MC a/o its close today of 21.5625 = 2.270B and its ADV averaged over the 23 trading days of its merged existence thus far, is 514,265.
A month has now passed since the merger and, as was forewarned here, MG has yet to report PZN's MC or ADV correctly. I have brought this situation to the attention of PZN's management with the hope that, periodically, someone over there could let MG know what S/O figure they should be using as well as correcting up the data errors on PZN's Profile page (Bob Crants' ego must love no longer even being shown on the page while CCA's officer's are shown instead of PZN's).
I don't know how much more time MG needs to get its act together but its entirely possible that we might be hearing and reading about some Lifer, convicted of multiple capital offenses, who simply walked out of a PZN facility dressed in the somewhat moth eaten uniform of an Air Force General. When they recapture him a short time thereafter, they find him in possession of a bus ticket and the directions to the address of MG's executive suite.
This seems to be a bi-monthly event at CCA-run facilities. No wonder the stock price is so low; the discount rate on future cashflows must include a considerable amount of risk.
Published by The Tennessean Monday, 2/1/99
Another escape embarrasses prison system
By Jim East / Staff Writer
Tennessee's beleaguered prison system took a double hit over the weekend as a colorful convicted murderer escaped from the South Central Correctional Center and a guard there was charged with helping him.
The Saturday escape of David Britt was the fifth since October at the Wayne County prison, which is managed by Corrections Corporation of America. It is in Clifton, about 100 miles southwest of Nashville.
Britt escaped by dressing as a guard and getting a correctional officer to escort him from the building during shift change, officials with the Tennessee Bureau of Investigation said.
Britt, 25, remained at large last night and is believed to have left the prison area.
Christine McClain, a SCCC guard, has been charged with facilitating the escape and was being held last night without bond.
"The best we can get is that she felt sympathy for the prisoner," said Mark Gwyn, a TBI spokesman.
McClain, 41, is in the Wayne County jail.
Britt, considered armed and dangerous, is described as a white male; 5 feet, 8 inches tall; and weighing 190 pounds.
Guards at the correctional center discovered Britt's disappearance during a head count about 4 p.m. Saturday at the prison, Tennessee Department of Correction spokeswoman Pam Hobbins said.
"They're looking for something to substantiate what his next step might be and then to move there," Hobbins said of investigators.
The escape couldn't have come at a worse time for the Wayne County prison.
In October, four inmates escaped by squeezing through a small opening cut in a fence during their recreation period. All were later recaptured, the last one in San Fernando, Calif.
Last Thursday, David Dwight Walker, a former unit supervisor at the prison, was arraigned on three counts of introducing contraband into a prison as a result of the investigation into the October escape. Walker was indicted on those charges in October by the Wayne County Grand Jury.
This guy has since been re-captured, but the company can't continue to win business if it doesn't improve its business practices.