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Corrections Corporation of America Message Board

  • Bottom_of_Food_Chain Bottom_of_Food_Chain May 17, 1999 11:44 AM Flag

    Watch for div cut...Typical next move..


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    • article for securities firm...

    • If debt is squandered, it's bad debt. If it's
      used to expand business with advantageous spread
      between income and cost of capital, it's good debt. It
      troubles me that the company plans to pay the "special
      dividend" out of borrowings --smacks of an LBO. They can't
      pay the special dividend until December -- that's
      always made me suspicious, but I'm sure it's because I
      don't understand the workings of high finance.

    • I did not say the proceeds would be used to build
      more facilities, I said the opposite. Also, what do
      you mean when you compare the property rights of
      Russia with PZN. What does that mean? Is it me or do you
      and lots of other people on these boards live in
      alternate universes??? I can't decipher half of the

      I will concede that the interest rate on the bonds
      may be higher than the current bank loan. However,
      with the uncertainty of interest rates going into the
      future, it might be better to lock in a fixed rate now.
      In fact, maybe the prospect of inflation coupled
      with the pending bond issue is a factor in spooking
      investors. With Treasury rates inching up, the market
      probably expects PZN to have to pay a higher yield on the
      bonds to attract buyers. If this is so, I'd rather lock
      in rates now than risk escalating rates on

    • The company would not get the new debt unless
      they thought the the return on capital would exceed
      the cost of capital.
      As for the stock drop, my
      theory is that a company official told the analysts
      something about the company that caused 3 of them to
      downgrade PZN today. Somebody knew about the coming
      downgrades beforehand and was dumping the stock on Thurs and
      Friday ahead of the news of the downgrades. This sounds
      an awful lot like insider trading to me. If there
      are any securities lawyers please respond.

    • I guarantee that the interest rate on the bond
      offering will be higher than the interest rate on the bank
      You right however that the proceeds will eventually
      be used to build more--they will redraw on bank
      lines and that will be accretive unless they AGAIN
      change the deal with OPCO and siphon off more
      The reason investors demand such high returns in
      areas such as Russia is there is no protection of
      property rights. Sound familiar?

    • All gaps on charts enentually fill
      but we don't know when? One year
      chart shows double bottom near 15,
      must hold support at these levels.

    • And everyone thinks this is OK. It is either a HUGE miscalculation or theivery. Neither is good

    • The Company has stated that it intends to use the
      proceeds of the debt offering to pay down existing debt.
      If PZN's stated intention is taken at face value, it
      precludes the use of the funds for acquisitions or
      construction of new facilities. Further, unless the terms of
      the bond offering are worse than the current credit
      line, it will not be dilutive to earnings! It may be
      that the Company expects interest rates to
      dramatically increase and has opted to switch from the
      uncertainty of a variable rate to the certainty of a fixed
      rate. A dilutive event can only occur when new equity
      or debt is issued and the newly available capital is
      not deployed wisely. In other words, if the cost of
      the capital exceeds the return on capital, it is
      dilutive to earnings. If the return on capital exceeds the
      cost of capital, it is accretive to

      If you understand the above and agree with my
      analysis, please pass along the information. It is
      important to get the correct facts out. Too many people are
      passing along misinformation which only clouds the true

      On the other hand, if other information has leaked
      to special interests that the general public is
      unaware of, that could be the real underlying cause for
      the dramatic drop in stock price. I wouldn't rule it

      That's my three cents (2 cents plus a little extra).

    • As of 3/99
      Book Value...$11.30....and that
      TAKES OUT the special dividend of $1.90/ share. So the
      BV with the special dividend is

      Cash paid out for the next 12 months...$2.20 + $1.88
      of special dividends equals $4.08...assuming no
      increase. @$15=27.2%

      If this situation is "neutral"
      I'll eat my hat (I might have to).

      The analyts
      continue to feel there are boogy men in the closets. Litt
      and Boston did there normal trashing today...citing
      it appeared Mangement left out the bad news on
      purpose in the 1st quarter....this sounds of
      bulls***....sure management is going to want to let bad news out
      RIGHT before their $300-$400MM dollar to make
      everything go smoothly....NOT. I think Litt and Boston are
      starting to go off the deep end.

      I bought a lot of
      shares today. It might continue to go down. I DON'T sell
      REIT's that have 97% occupancy and more business then
      they can write. Obviously others disagree.

      Wall Street always assumes everyones a crook just
      because many of them are. Conflicts are so abound in the
      brokerage business it's disgusting. If you want Russian
      Mobster type the fine print of your local
      brokerage firm "managed fund".....IMHO.

    • The market is overreacting not to the
      fundamentals; they are excellent but to the possible dilution.
      300 millions of fresh cash is going to be great for
      growth, building more jails and renting them, but it will
      also dilute the earnings. So how much does this 300
      millions bond offering should knock off : my guess is
      about $ 2.50 a share. Yep you heard right technically
      pzn should at least trade at 17 the rest is panic,
      overreaction, the market today, the downgrades, the feds
      tomorrow. In my view we are in the middle of a perfect
      storm and any signs of improvement will be very bullish
      indeed. I would welcome any thoughts on this ...and I
      could not resist a few at 14 3/4

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