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Corrections Corporation of America Message Board

  • Reitmaster_98 Reitmaster_98 Dec 22, 1999 4:10 PM Flag

    Wait a second...I doubt C-Corp.

    Read this below...it does not state
    anything
    about C-corp even being an option...this is from press
    release. Also, PZN showed dividends
    payable on their
    balance sheet. I don't honestly know how they could
    string us along
    for this long then drop that kind of
    bombshell
    on us.


    The Company and CCA also
    announced that they have engaged Merrill Lynch &
    Co.
    (``Merrill Lynch'') as their respective financial advisors.
    Merrill Lynch was engaged in
    connection with the
    requirement in the Company's credit facility that the
    companies
    complete a sale of equity and/or debt securities in order
    for the Company to make its
    special dividend
    payment in cash. As part of this process, both companies
    and Merrill
    Lynch have evaluated the Company's and
    CCA's financial conditions and results of
    operations
    and are considering a broad range of financing and
    strategic alternatives to
    address the liquidity needs of
    both companies. The companies and Merrill Lynch are in
    the
    process of evaluating proposals received with respect to
    these financing and strategic
    alternatives. No
    assurance can be given that any transaction will ultimately
    be
    consummated. In addition, no assurance can be given as to the
    exact timing of the payment
    of the special dividend,
    whether paid in cash and/or in securities. The Company
    will not
    update its review and negotiation of
    financing and strategic alternative proposals until
    this
    process has been completed.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I thought I understood the problem before. Income
      from the old entity forced PZN to pay a special
      dividend that had to be borrowed. The REIT structure,
      requiring payout of 95%, prevented the accumulation of
      capital. Accounting "mistakes" in the PZN/Opco
      relationship made lenders leary to issue PZN new debt at
      anything but usurious rates, if at all. And the OPCO/PZN
      relationship was frought with conflicts of
      interest.

      But assuming the Special and ordinary will be paid
      because of time constraints and the desire to avoid
      litigation, why would Blackstone be interested in Dereiting
      afterward? Retention requirements are dropping to 90%. The
      special will never have to be paid again. The conflict of
      interest/accounting error issue will have been put to rest with the
      departure of the Crants Family. Capital will be there to
      finish projects (at least 300 million investment, could
      be 500, that is probably 100 to 300 available to
      finish projects). Further, relationship with Blackstone
      is a deep pocket IF in the future projects present
      themselves that are clear money-makers, not specs.


      But the board seems to feel it is inevitable that we
      go C-Corp and buy back OPCO, an entity with negative
      equity (from what I understand from other posters). Why?
      I thought I understood why it was a bad idea to go
      REIT in the first place, but the piper will have been
      paid already, so why go back?

      Best - - - ST

    • bloomberg reported early a.m. that pzn selling a portion of business,only caught sketchy details. Anyone hear the same report?

    • What news did I miss. What has Blackrock committed to do? Thanks

    • With Blackrock we didn't get Richard Rainwater.
      We didn't get someone who plans to personally run
      the business and still be here in 5 years.

      But
      we got the two things we needed most:

      1)Doc &
      Co. will be replaced with professional business
      managers courtesy of Blackrock and Fortress. You will no
      longer have a CEO saying "CA. needs us more than we need
      them". You think this group is gonna build alot of spec
      prisons?

      2)A second chance. They immediately fix the balance
      sheet and solve liquidity concerns.

      Now, am I
      concerned that somehow I get bought out for $12 in nine
      months? I guess so but it sure beats where we were
      headed.

    • managers.
      From National Real Estate Investor
      August 1998:

      Fortress Investment Group is born
      from former Wall Streeters.
      Several Wall Street
      veterans who have worked together since 1994 have come
      together to launch Fortress Investment Group. The company,
      which is based in New York, with offices in London and
      Toronto, was formed to invest in opportunistic real estate
      assets on a global basis.
      The four former executives
      of UBS Securities are Wesley R. Edens, who will
      serve as CEO and chairman, Robert I. Kauffman as
      president, Randal A. Nardone as COO and Erik P Nygaard as
      CIO.

      Anyone have comments?

    • I am very optimistic. Most of my holdings are in
      an IRA but I screwed up and bought additional shares
      at $13 in a taxable account so I'm sitting on a
      $30,000 unrealized loss that I had intended to take
      because I have offsetting capital gains. Now, I'm
      probably going to just ride with my high cost-basis
      position because if I sell at $6 I'm going to want to buy
      back at $9 in January.

      I have no idea what sort
      of time frame its going to take for the stock price
      to climb back up but the important thing is that
      Blackrock fixes what is broken.

      It's important to
      remember that the core business has continued to grow and
      do well through this whole period. We dropped in
      capacity utilization because prison additions come in big
      chunks that, when built on spec, are hard to fill on a
      timely basis.

      Point is, the business was never
      broken. Management (Doc) was broken. He knew occupancy in
      Q4 1998 was slightly off and he covered it up. In Q1
      1999 he had to increase payments to OPCO and he tried
      to conceal that and then gave a bumbling explanation
      to Analysts ("The payments don't effect
      FFO").

      No question, Doc's antics have done severe damage to
      the Balance Sheet but Blackrock fixes that
      overnight.

      Also, despite Litt's concerns over upcoming dilution,
      ask yourself this - Wherever Blackrock is buying in-
      $6,8, wherever...do you think they would get involved
      in such a murky area unless they were confident they
      could double their investment in less than 2
      years?

      Now, the screaming idiots who spend more time on this
      board than me and don't even own any stock will say
      "Great, getting back to $12 in 2 years; big deal". Well,
      to me and other shareholders doubling the share
      price in 2 years is good. I can't do anything about the
      fact that I road this thing down from 21 to 13 and
      then to $6. I have to unemotionally look forward not
      backward and I think PZN has a great chance of being a $12
      stock in 1-2 years and a $20 stock in 3. Perhaps even
      better. We'll see - at least I'll be around to see.

    • operation. The following is from 4/19/99 Real
      Estate Advisory News:
      Berkshire Realty Co. has agreed
      to sell itself for about $1.3 billion (US) in cash
      and assumed debt to investors led by its chairman,
      Douglas Krupp, and real estate funds managed by
      BLACKSTONE GROUP INC. and Goldman Sachs & Co. The group will
      pay about $660 million (US) in cash and assume about
      $600 (US) million in debt to acquire the Boston-based
      REIT, which owns 82 properties with 24,287 apartments
      in Florida, Texas, the mid-Atlantic states, and the
      Southeast.

      Berkshire is the second REIT this year to agree to go
      private by selling out to a management-led group. The
      other deal involved California-based Irvine Apartment
      Communities Inc. The Krupp group�s bid for Berkshire topped
      three other bids and the sale is subject to shareholder
      approval.

      These guys aren't managers, they are holders.
      Doc &
      Jr. may not walk, if a scenario anything like this
      plays out. They may be making a play for the whole bag
      of marbles and a low stock share price would be of
      benefit to them. I just hope that the funds that bought
      into this at $9 to $10 a share knew what they were
      doing, because I followed their lead.

    • and Brendy's figures on short sellers are right, there will be a nice short squeeze in the works. Do you see the sliver of light at the end of the tunnel?

    • If I understand what is transpiring, we are going
      to get back the "old CCA" that was
      pre-PZN.

      This whole issue is complicated and confusing, but
      remember that PZN does not currently own CCA so it's not
      ours to spin off. Doc and Jr. took CCA off our hands
      when they created the New PZN.

      It now looks
      like we're going to get CCA back; otherwise Blackrock
      wouldn't be interested. However, it is going to cost us a
      pretty penney to pay Doc to go away and give us back
      CCA/OPCO.

      I'm guessing Doc walks away with a $20 million check.
      The interesting part will be how much we have to pay
      to get OPCO back. That's all already been decided;
      otherwise today's Bloomberg article wouldn't have been
      leaked. We just don't know the numbers yet.

      While
      the $20 million is going to sicken shareholders, they
      should keep in mind that Doc was spending this much
      every 2-3 months on wastefull banking related expenses.
      Losing Doc for $20 is a bargain.

      The market
      hasn't figured out what's going on yet. Still alot of
      questions to be answered. However there are alot of
      positives out there. With a new management team and dressed
      up financials, we'll probably be able to refinance
      the ridiculous rates of interest on our credit line.
      Also, future borrowings will be at much better terms
      and availability will expand.

      Before it's all
      over I suspect we'll have ML picking up coverage and
      saying we're a Buy. Who knows, perhaps a focus stock of
      the week! I think we'll even bring Litt around. He's
      taken this thing to a personal level, for good reason.
      I suspect he'll soon take his foot off our throat.
      All the Analysts will soon turn from mad/deceived to
      wanting our IB business.

      I suspect we might even
      have a happy cleo before it's all over. I'm looking
      for $7 tomorrow. And that's a good start.

    • I don't believe they had to specifically spell
      out every possible option, however, I would group "C
      Corp" under "...considering a broad range of financial
      and STRATEGIC alternatives to address the liquidity
      needs...".

      Anyway, it appears that the management group that made
      those statements won't be there 1/1/00.

      As
      Quadrophile said, he's not a lawyer and I'm not a lawyer
      either but I suspect Blackstone has 1 or 2 around their
      organization and they've probably looked at this deal. If the
      number is $300mm and if it is Blackstone, that's alot of
      money, even for them.

      All in all, I feel a hell
      of alot better now than I did six hours ago. There's
      a good chance we saw the low today. All the signs
      were there including the lowest downgrade you can get
      from the best Analyst, heavy blow-off type volume, and
      a strong intra-day turnaround due to strong rumors
      of fundmental news.

      • 2 Replies to RetiredPaperman
      • nothing left!
        sux

      • It may seem incredible to you, the small group of
        regular posters who populate this board, that the pained,
        death dance performed by this stock could actually
        attract a lurker to its BB, but you would be amazed by
        how educational it is to watch the way a group of
        investors react when a company sh*ts the bed, and the share
        price does a death spiral. I am not mocking any of you,
        and you who have held and suffered have my
        compassion, small consolation that it is. I was looking for
        high yield when I became attracted to this stock back
        in the $20's, before the infamous CC in May. What
        saved me was I had learned that I don't have what it
        takes to bite the bullet and take my medicine by
        nailing in a stop with railroad spikes. With all due
        respect to the long time posters here, especially flipper
        who recently revealed that he is anything but a loser
        in the markets ( congrats on your IPO successes),
        anyone who rode this thing all the way down needs to
        re-evaluate their investing methods. I am certainly not
        suggesting anyone sell down here, hell the damage has been
        done, might as well take a flyer on it now, but people
        need to think about bringing a parachute before the
        next time they fly. Just presenting a lurkers point of
        view. (Never was long or short this stock, not once)
        Bulworth
        P.S. I also realize that some of you have forgotten
        more about trading than I'll ever learn, no offense
        intended.

 
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