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  • newMK newMK Dec 16, 1999 10:00 PM Flag

    Question on special dividend

    " I have yet to hear any bad news from PZN and
    have owned the stock for 6 months."

    Technically
    some of this goes back seven months, but just just to
    bring you up to date:

    CEO Doc Crants and his
    son, Bob, held a quarterly conference call in May and
    disclosed signifcant cash shortfalls in their primary
    tenant, CCA, which would require about $90MM in
    unscheduled payments from PZN to CCA. Doc blamed it on a
    silly accounting mistake, but it was discovered later
    that CCA had operating problems (occupancy and
    ramp-up) which weren't disclosed.

    A proposed $300MM
    debenture offering was scaled back to $100MM at near
    usurious rates.

    The balance of the $1BB credit
    line was obtained at high rates and a $40MM fee, with
    a requirement that a Strategic Investor put in
    $100MM of equity (dilution) before a special dividend
    could be paid.

    California passed a law that
    wasn't supposed to get passed - no out of state
    prisoners in privately run CA prisons.

    PZN held an
    analysts' meeting and guided downward revisions of
    FFO.

    Most analysts dropped their ratings on the stock;
    PaineWebber dropped twice, to unattractive.

    The
    strategic investor hasn't materialized.

    The Q3
    conference call was "scripted", with no Q & A allowed. it
    was announced then and in SEC filings that CCA would
    not have sufficient cash to pay its bills.

    The
    normal dividend declaration date has come and
    gone.

    The company has given no guidance on what it is
    doing.

    If none of that sounds like bad news, perhaps you
    think the drop from 22 to 7 in seven months was just a
    fluke.

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