Interesting thumbmail analysis. I'm away from my home office so I can't do the analysis I'd like to do but mine would go something like this...Pre-merger, CCA was supposed to make something like $1.20 a share (adjusting down for the drop in communicated growth from 40% to 20%). PZN was about 1/4 the size of CCA so you can almost exclude them from the equation but if you choose to include them, it probably doesn't hurt my case.
Take $1.20 and give it a pe of 25 instead of the previous 40+. A pe of 25 on a 20% grower would be quite conservative for this market. I think the S&P pe is about 28 and growing under 10%. $1.20 x 25 is 30.
With that cursury analysis done, my argument is that it ("it" being the numbers) doesn't matter. PZN has no choice. They might have pulled off the REIT if they'd operated flawlessly but the "mistake" is the end of the great experiment. Regardless of the numbers, the market has spoken. The stock is at $15 and going lower. IF the debt deal goes through, they'll still need to issue stock early next year and it's going to be at horribly low prices.
Fortunately, they've run the actual operations side of the business pretty well, except for Youngstown. Otherwise we'd be at 10 right now.
In summary, the numbers don't matter anymore. Credibility is zero and it can only be fixed by making the whole entity a public corporation. Lose the REIT status, PZN pays taxes at the lower corporate rate, I stop paying at 46%, the stock goes higher than it would otherwise. I'm afraid you won't find the answer to this one on your calculator.
These new payments to Opco started on January 1. Not only the company did not tell shareholders and analysts then, it DID NOT EVEN MENTIONED IT DURING CONFERENCE CALL ON Q1 JUST A FEW DAYS AGO!!! Only the fact, they are going on the road peddling bond deal, has made them to come clean. HOW CAN YOU TRUST THIS MANAGE- MENT, THEN??!! And, after this all, Crants has the gall to give a lecture on the conference call. Have you heard the CONDESENDING MANNER IN WHICH HE LECTURED ANALYSTS ON WHAT IS FFO AND HOW IT IS COMPUTED? Another issue is Opco: where else can lessee renegotiate a bad deal so easily. Ops, we forgot to charge you for the start-up costs!! NOBODY TRUSTS THIS MANAGEMENT TEAM ANYMORE! And this "INDEPENDENT" BOARD, THAT FEEDS AT THE COMPANY TROUGH IS NO BETTER, IMO. And the most upsetting thing is, that this is very good business. It's a shame, that all these unscrupulous people are allowed to destroy good company. Many of you mentioned Litt today. I do not know, why are you fixated so much on him; after all, he and Cleo were THE ONLY TWO PEOPLE WHO WERE DEAD RIGHT ON THE FACT THAT THIS CONVOLUTED STRUCTURE IS WROUGHT WITH HUGE CONFLICTS OF INTERESTS! But, today Bradford downgraded(will they return IB fees), Legg, NBMO, FTU, all the BIG SUPPORTERS OF THE COMPANY THRU OUT THIS 12 MONTHS ORDEAL. AND ORDEAL IT WAS!!! There are no easy solutions. Management credibility is shot. But, to start: 1. Reduce Doc salary to $1 and give him incentive options with strikes WELL ABOVE
current stock price. 2. Fire genius Jr. and his lawyer friend, who concocted this convoluted structure. Let them go and play with their hedge fund. THEY ARE USELESS BAGGAGE, ANYWAY! 3. Clean out the Board of those members, who work at the company or were given contracts or done business with the company, with TRULY INDEPENDENT MEMBERS. 4. Consider merging Opcos with the PZN (and have bankers, lawyers and the Crants family reimburse the company for wasted corporate assets) or, at least, make ALL OPCOS DOCUMENTS PUBLIC. THIS FIASCO WILL NOT GO AWAY EASILY!!!
Remember back in November when the posters on the CCA board mocked the AFL-CIO Office of Investment for opposing the deal, saying the reason they were doing so was because they opposed privatization. Guess again--the AFL-CIO's concerns about conflicts of interest and enrichment of Opco at PZN's expense are HAPPENING NOW and everyone here is wringing their hands about how they were duped.
pay back all those people who bought PZN at higher prices than today since it was your mistake or miscalculation or fraud or whatever you want to call it that allowed people to buy your stock at prices after your conference call IMHO management like this needs critics like me and other investors that vote with their feet