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Corrections Corporation of America Message Board

  • ewocfo ewocfo Dec 22, 1999 5:13 PM Flag

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    I think NewMk's arguement, and PaineWebbers
    arguement is that the dividend could be paid throughout
    2000 for 1999 earnings. If this is so, then PZN could
    be a C corp in 2000 and pay out its dividend for
    1999 throughout 2000 while also retaining enough cash
    for projects.

    I see a cash dividend being
    paid from earnings of PZN as a C corp and blackstones
    cash going into projects.

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    • made complicated. That stock buyback was a
      publicly announced purchase of stock by officers and
      directors of PZN and CCA. For some reason I never
      understood (double positive PR impact, perhaps?) they ran
      their purchases through the company.

    • I don't remember a company buy-back right before
      the vote. I do distinctly recall (and flipper will
      also) that 3 days before they released Q3 or Q4
      earnings Doc made a glorious announcement that he and
      others had bought stock personally. It struck flipper
      and I as strange because we thought they were in a
      quiet period. We were in CCA at the time and it brought
      the stock back from $16 to $22 in a few days.

    • NewMK, you may be right on the disclosure and
      related issues just prior to the merger vote. What has
      always seemed curious to me is that the company did a
      stock buyback just before the merger vote, apparently
      to get the price up and put a positive spin on the
      merger. Now, whenever the question of a buyback is raised
      (by stockholders), the answer is always that the
      company needs its funds for expansion. We all know the
      answer to that one. But if the class action firms can
      build a case for deception prior to the vote, the
      buyback would seem to be part of the fabric, no? I
      thought it a good idea at the time, I'm sure others did
      too. A company believing its own stock was a bargain.
      Whatever happened to Doc's belief in the value of his
      company?

    • All they are obligated to pay is what they have
      declared, and they have have paid those. The classification
      is controlled by tax rules, which in turn contols
      the timing options. But no matter what, they can't
      pay anything if they don't have the cash. Borrowing
      money to pay dividends always seemed stupid to me.
      Worse, then the lenders control whether the dividends
      can be paid.

      As far as legal exposure, who
      knows. There will be lawsuits whether they are justified
      or not. To me, to and some non-ambulance chasing
      lawyers I've talked to, there may be more exposure in the
      disclosures surrounding the merger: miscalculation of impact
      of leases on OPCO, hidden occupancy problems,
      delayed disclosure. I hope that whoever is already suing
      has included the investment bankers and anyone else
      involved in setting up the lease terms.

    • I hope you are right. However, I am losing all
      respect for David Dreman. Supposedly, he has owned PZN
      for a while now. It was a top holding of his Kemper
      Financial Services fund as of Sept 30 - Look under
      www.kemper.com and you will see it. I wonder what he has done
      since ? He mentioned it in Forbes twice in the last few
      months, but recently there has been no mention in his
      Forbes column. So I hope Dreman is right because
      otherwise, his "High Yield" fund will become the "LOW Yield"
      fund. By the way, what is I.R. ?

    • The remainder of the special dividend will be
      paid this year. I specificaly asked that question to
      Kerry at I.R. a few days ago, and she said it would be
      paid. They are using the 1.80 previously paid and that
      leaves .20.

      I think they are obligated to pay the
      regular
      but are deferring it as long as possible.
      If they
      try some other ruse they will be in trouble.The
      changing to a C corp. if it happens will not be immediate.
      I agree with NHY the institutional buyers want the
      yield. Dreman recently bought a few million shares for
      his high yield fund.

    • One thing that has always concerned me about
      Junior's assertion that the dividends paid out so far can
      be used satisfy the requirement of the special. INL
      (I'm no lawyer) but one could argue that declaring 55
      cents as a regular dividend from FFO and a nickel
      toward the special reasonably establishes an expectation
      that the rest of the "special" will be paid by year
      end, as promised in the merger documents. We have been
      entitled to the "special" under the merger terms, and it
      is by definition different from the 95% of FFO due
      as a reit. Thus, it seems that Doc and company
      cannot relieve themselves of the obligation to pay out
      the $1.60 or so balance on the "special" dividend by
      pointing out that $1.65 of regular dividends have been
      paid out. The company "intends to qualify as a reit,"
      thus the 95% of FFO. The special is a term of the
      merger agreement. Seems to me that the word "fraud"
      might apply here, IMO. Can anyone nelighten me on this?

    • "We intend to pay special dividends as planned. The declaration must be on or before
      12/31/99."

    • what's a few bucks worht of tax savings this year,
      how can you walk away from this much dividend!
      just hold on for better times!
      you cannot get rich tax selling!

    • let's hope this works out!

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