In late November, Chris Haley of First Union did an analysis of what a PZN/OPCO combination would look like, assuming $300 million of new equity (at $10 per common share - wishful thinking).
He projected $175MM of pre-tax income for 2000, but I believe he double-counted OPCO's losses to the extent that PZN capitalized their reimbursement ($56.5MM). Adjusting his numbers would result in after-tax income of $105MM (40% tax rate). This doesn't include additional debt cost of the $200MM increase in the LOC.
Blackstone would get up to $42MM on an annualized bais ($63MM with the additional 6% kicker if the stock price doesn't recover). Thus it seems that the real dilution (of earnings) is potentially 60%.
On a positive note, Haley projected 2001 EPS in his model of $1.05 (more than double his 2001 estimate of .49). He didn't give the details, so I don't see where the growth came from, but he obviously sees some big upside when (if) the occupancy problems are fixed. Extrapolating from his 2001 EPS, Blackstone's dilution of earnings would be between 20 and 30 percent. At that point, not too bad a deal.
FWIW, Haley's 2000 EBIDTA was $366MM (adjusted). That would be allocated as follows (roughly): $70MM taxes, $120MM interest, $8MM old preferred divs, $42MM new preferred divs. 2001 would be even better.
Corporate strategy: build, fill & bill, whatever the cost. Maybe OK - middle one is the issue.