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Corrections Corporation of America Message Board

  • brendy45 brendy45 Jan 5, 2000 11:19 PM Flag

    Food for thought....

    I feel badly for all the investors that have been
    taken to the cleaners by Crants & Co., including
    myself. These guys should be sent to jail. I also don't
    blame anybody for voting no, for no other reason than
    to make sure that these thieves don't walk away with
    any money and that the other OpCo investors aren't
    made whole. But for all those who think Blackstone is
    stealing PZN I would ask one question. Why hasn't anyone
    else come along to offer a better deal? There are
    enough savvy players out there that would surely step in
    to fill the void if they saw the value in PZN. Who
    knows, that may yet still happen but if it doesn't it
    speaks volumes about PZN's current plight and may
    indicate that Blackstone & Co. are not getting the deal of
    the century after all.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • wrong. In fact, they did just what every other
      party (except Doc) did; they looked out for their best
      interest. My beef with the situation is that our CEO cannot
      fairly negotiate a package for himself while
      concurrently negotiating for the shareholders.

      In
      fairness, I've seen nothing in writing concerning Doc's
      $28mm payment, other than Reitmaster's post so I'm
      assuming his information is good.

      You can bet that
      if all that Doc got out of this thing was his 1.6mm
      shares a better deal would have been struck.

      • 3 Replies to RetiredPaperman
      • In reading over the posts on this board, and at
        Reitmaster's Club site, it seems obvious that the deal PZN has
        entered into is abhorent to almost all shareholders. It
        is so blatently dishonest that even the least
        sophisticated or casual observer immediately is able to see
        many of the negatives involved.

        I cannot see
        how the lawyers can fail to tear PZN a new one with
        this deal! I've seen so many lawyers filing on
        companies, it is easy to become blase about their prospects,
        but few of those suits have the foundation of this
        case.

        So... I'm going to go out on a limb here and make a
        prediction. THIS DEAL WILL NOT BE CONSUMATED! As a matter of
        fact, I don't think this deal will ever be voted on.
        PZN will de-reit, being unable to pay dividends, but
        it will be forced into the slower-growth scenario
        that it would have been using with more prudent
        management anyway.

      • We do not know what was in those other SI
        proposals. They haven't seen fit to tell us. May have been
        better for the shareholders, but not so good for Doc. If
        Doc has a conflict of interest in these negotiations,
        that could be a real problem. If Blackstone offered
        Doc a fat package of perks and money to sign a deal
        that was not the best for shareholders, that might be
        called a bribe. I find it curious that IR was reassuring
        us that the company "would not screw over the
        shareholders" (verbatim quote from my conversation with a woman
        whose name I know but will not post), while the i's
        were dotted and the t's crossed on this deal we are
        told was not "chosen" until the last minute. I suppose
        we were being treated to some "Bill Clinton logic"
        in the CC. I would love to see a discovery process
        to uncover the chronology of this "deal." Every time
        PZN/CCA makes a move to fix a problem, big money goes out
        the door for fees to "consultants," bankers, and wall
        street "houses" (and you know the kinds of houses I
        mean). This stinks.

      • This stock is overvalued at $5. Otherwise, why
        would mgmt sell it to the SI group for $2.21. In
        effect, that is what they are doing. The SI group gets a
        12% cash dividend for a minimum of 5.5 yrs. That is
        $4.29 (5.5 * $0.78.) $6.50 - $4.29 equals $2.21. The
        only condition is that they hold the stock for 5.5
        yrs. (Of course, it's even less than $2.21 with all
        the other perks that the SI group gets.)

        This
        makes me feel ripped off, and I bought the stock for $4
        9/16 per share. I say, forget the S.I. group. Keep the
        REIT, sell more common stock for $2.21 (actually maybe
        someone else would even give us more), and skip the after
        tax preferred dividend. (That might leave something
        for us common shareholders.)

        I just wonder
        what Dreman plans to do.

    • You can't combine PZN and CCA to make that
      comparison. There are too many payments back and forth which
      cause double counting. Instead you would have to rely
      on their proforma numbers as provided in the 10Q.All
      numbers are for 9 mos.YTD:
      1998 PZN proforma rev =
      $157.3M
      1999 PZN rev = $220.8M(up 40%)
      1998 PZN proforma NI
      = $121.3M
      1999 PZN NI(excluding tax cost for
      REIT conversion) = $169M(up 39%)

      The problem
      comes when you add in CCA. My derived numbers from old
      10Q's are:
      1998 CCA NI = -37.7M
      1999 CCA NI =
      -84.5M

      This gives a proforma for the new combo as:
      1998 NI
      = $83.6M
      1999 NI = $84.5M(excluding tax on
      conversion)

      The drop off in CCA NI does not mean that the problem
      is with CCA operations as their NI is controlled
      largly by the cross payments with PZN. But I think the
      overall proforma results do say that the problem is with
      expense(both PZN and CCA) and not so much with revenue growth.

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    • Can you be more specific on the facility or water utility in question? A county name perhaps?

    • Thanks for your prompt reply to my # 10292.
      However, my main question is "do you, or anybody, have any
      knowledge, or update, on the Tender to the FBOP?" I'm trying
      to look to the future, as I doubt that we can change
      what's been done in the past.
      Anybody have any
      thoughts on this one?
      Many thanks.

    • Yes, thank you, I did mean carve out, didn't notice my error. And your explanation makes sense, thanks.

    • The tenant agreement was capitalized on both
      sides. In Opco you'll see it's listed as a "deferred
      credit". Both balance out when merged together. I
      understand why Doc capitalized the incentive feees/tenant
      agreement in PZN, not sure way in Opco. I was told to
      persevre the tax benefit. I'm still not sure the purpose
      of that, like a merger might have been in the wings
      for awhile?

    • is it possible that blackstone is snapping up all the shares @ $5 hoping to take PZN private?
      Is it possible that they threw out a bogus deal anticipating the selloff?

    • I do think it was a good idea to have a REIT that
      CCA could sell off the property to. Doc just went
      much too far. I think WHC and CPV have done it the
      right way.

      Now that CPV is the only prison REIT
      do you think there is any chance that CCA would sell
      off their property to them? I know that right now CPV
      would have problems financing them but in the next 2-3
      years it might be a smart thing for CCA to do. CPV has
      a good reputation and CCA could pay off all their
      debt if CPV became a regular buyer of the real estate.
      As you know CPV has very clean leases and there
      wouldn't be the huge problem we have had with
      pzn.

      It seems to me that this change with pzn puts CPV in
      an excellent position for future growth.The stock
      price seems to be starting to recover and my guess is
      they will be able to start raising money again later
      this year.

    • "why did Doc have to go back to the well so often
      for fresh cash? "

      The REIT status forces
      companies to go to the "well". PZN has 14,000 new beds
      under constrution. $140mm in incentive fees were kicked
      back to Opco, the list goes on. With all this in the
      growth pipeline it's no wonder everyone wondered about
      "why pay out 95% of taxable income".

      As I
      understand it, it has been an occupancy and a set-up issue
      not a opertional. Back in the 4th of 1999 the total
      occupancy for the firm was in the 70's%. Breakeven for Opco
      was 95% occupancy. Doc had a lot new beds come on
      line. The huge lease rates were due payable from the
      day the building was done, surprise ramp-ups were 6
      months and they blew the cash flow numbers. Hence Opco
      was losing hoards of money.

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