Either in Cash or Stock...read the
One way or another it will be paid.
PZN may get an investor at these insane
that is willing to put more than $100
I hear you but the point I was trying to make is
that Doc could make the choice such that most
investors would essentially be forced to take the stock.
For example offer $2/share in cash or $5/share in
stock. At some point reasonable investors would have to
choose stock, I would think.
<<<why not offer either $2.00/share in
cash OR $3.00/share(pick your price) in the new
That would probably work. Problem is, I think you
would be in the minority in taking stock. If the offer
was preceeded by some really positive news like
completing a big new contract or California's ruling being
overturned, etc., then maybe more investors would take the
stock. IMO, Doc would have to line up the institutions
and big investors to take the stock rather than cash
for this to work.
I agree completely. Am not only still in, but
have increased my positions over the past week. If PZN
doesn't recover within six months or so, you can expect a
well-publicized lynching of a West Coast portfolio manager by his
Is that I still am of the opinion that the
business model (PZN and OPCO) can still earn close to $2
annually in the long run. I base this on consensus
projections by analysts as well as projections by some of the
more informed posters on the board.
earlier post I mentioned 5 problems that I felt were
driving the stock to unrealisticly low levels. The only
one which wasn't temporary was the management of the
company. This is the thing that really bothers me right
Most of us that are still in this thing are value
investors. This is how I label myself.
It has been my
curse to get into most stocks way too early, but
fortunately I have had success by holding long term and
selling when the company comes back into
The difference between PZN and most other situatiuons
I have been in is that management has not been
straightforward. The latest example of this is the conference call
where there was no Q and A. You can find many others by
simply reading this board.
The mistake I m
I doubt that Georgia would cancel any contract
with the privates due to price. The State of Georgia
estimates their own per diem cost to be in the high $50's;
PZN/CCA's rate is in the mid 40's and the other private
provider in Georgia, CRN, is in either the high 30's or
low 40's. Either way, the privates' costs are
significantly lower than the State, and Georgia has stated they
need the bed space.
I'd guess that if there was
any truth to PZN/CCA not renewing the Georgia
contract, it would be because PZN/CCA had another source of
inmates in mind. I hear that Georgia can be difficult to
deal with sometimes.
It seems to me that if PZN is facing a liquidity
crunch of sorts, an easy fix (albeit one that would piss
off those who like the REIT status) would be to
simply stop paying cash dividends and forego REIT
status. You'd conserve the cash (though some of it would
have to be paid in tax) and be able to lessen the need
Am I wrong on the foregoing? If
the company went this route, would management still
find a way to screw up further? Any comments would be
appreciated. I'm holding PZN as a long term investment but
would like some encouragement that crime is still a
problem, criminals need more prisons, and PZN has the
solution to overcrowding.
As you said, PSA offered a choice to it's
shareholders, $.65 per share in depository shares OR $.62 in
cash. Given PZN's precarious cash position, what's to
stop them from offering a really one-sided choice to
satisfy payment of, for example, a $2.00 required 1999
common dividend. If $2.00 was the required distribution
to retain REIT status and they really want to
conserve cash, why not offer either $2.00/share in cash OR
$3.00/share(pick your price) in the new stock?
offer would "induce" shareholders to accept stock and
personally I'd rather take the stock in this choice if it
means not having to be diluted by selling a Strategic
Investor $200 million of stock at $7/share. At least if
you accept the $3/share in the new stock you are not
being diluted. Kind of like a Rights Offering except
shareholders aren't paying anything in. If some shareholders
choose to accept the $2.00 in cash, so be
While this all may sound too far-fetched to consider,
think about what we've really been through and how much
of that could have been forseen. I'd rather see
something like this than fire-sale prices paid by a SI.
Re: Public Storage
Public Storage is a
real weird situation. Here is a company with great
cash flow that is in the situation of having so much
taxable income that it has to INCREASE its dividend to
conform to REIT rules. However, PSA would rather issue a
new class of common stock rather than increase their
dividend. Seems they want to be a growth company without
having to pay income taxes. Maybe this is what Jr.
originally had in mind! Yes, it does seem to be more like a
preferrred but to PSA the additional dividends on the new
shares is a lot less cash out than the principal they
would have to pay out.
shareholders are being given a CHOICE between cash or these
shares at a discount price. Common stock can be used
that way, even by using the regular common shares.
This would basically work like a DRIP where the
dividends are being reinvested in more shares but still are
taxable to the shareholder. The key word is
The problem with PZN using a "DRIP" is knowing what
percentage of shares would want cash instead of more stock.
Judging from recent events or non-events, I think a whole
lot more people would take the cash rather than more
stock, even at a discount to market, than maybe would
have been the case a few months ago.