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Corrections Corporation of America Message Board

  • billberggren billberggren Jan 19, 2000 10:45 PM Flag

    Value of PZN

    PZN owns 2.7 billion dollars worth of prisons
    with a debt of less than 1 billion. A debt to equity
    of 0.75. After paying back its loans it has positive
    cash flow of $0.39 per share last quarter, $0.55
    projected this quarter, and $2.30 is very possible this
    year. It could use this money to buy back preferred,
    lower debt, or build more prisons. It needs no cash
    inflow.

    The only thing this proposed merger has done is lower
    the credit rating to B--, drop the price to 5, and
    eventually give away 50 percent of the company away for
    free. Vectorvest has this thing valued to the moon. The
    P/E is now 2.5.

    Just because you bought at 5
    and the deal sounds reasonable, as RP once said when
    the lower cost basis of the average shareholder drops
    to $5, at the time of the vote they are going to
    accept it. Probably thinking it is a catalyst. When in
    fact all they are doing is giving away 38 percent of
    the company for free. Yes, after the deal the stock
    will go up and present management and new shareholders
    will be happy, but the old shareholders of last year
    who bought from 30 to 7 will be the losers. A no vote
    may piss off management though, but it is a risk I am
    going to take by voting no.

 
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