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Corrections Corporation of America Message Board

  • flipper_58 flipper_58 Nov 3, 1999 12:17 PM Flag

    PZN's 12% Bond, etc.

    Bid 99 no offer.

    Pretty good considering
    the junk market in the last few months.

    IMO,
    there was 1 critical issues that caused the bulk of
    this stock decline. Occupancy and Doc not being up
    front with problems there. Problems from Youngstown to
    overbuilding. I see it as that simple.

    Prior to the
    bomb-shell in May, PZN was $22 and on the mend. The stock
    price was quite arrcretive and we had a willing buyer
    of $600mm per year at that accretive price. The
    decline since that time only goes to show how vunlerble
    REIT's are because of their outside financing needs. And
    two, how the institutions will dump on you if your not
    upfront with what's happening.

    I attribute the
    fall from $22 to $14 due to occupancy issues and $14
    to $10 due to the REIT structure and it's need to
    dilute investors even if the company does not want too,
    the catch 22 we all have talked about.

    The
    REIT structure is grand as long as the investor
    receiving the cash realize that part of the deal is they
    must invest back part of that cash. If that does not
    happen the REIT financing structures falls apart as I
    see it. The only way out from a fall out as we have
    experienced is internal growth, slow and painful,
    IMO.

    Converting back to the previous C Corp/captive REIT
    structure makes obvious sense from a business
    standpointpoint, from a legal one, etc....I don't know.

    Can
    PZN grow out of this mess?.....I would be interested
    to see internal cash projections after the next
    earnings report. CapEx were running at a clip of $700mm a
    year. Since they can't raise debt and equity is too
    expensive, I'll be very curious to see that number next
    week. Some of the major tenant incentive fees should be
    out of that number.

 
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