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Corrections Corporation of America Message Board

  • millenium_miser millenium_miser Jan 29, 2000 2:56 PM Flag

    The proposal will get the votes

    IMO. Best information I can get is that
    institutions hold about 43% of PZN and management holds some.
    Institutions will make an unemotional evaluation of their
    options. As I see it there are two options -- 1. accept
    the deal on the table which will dilute stock, but
    raise stock prices somewhat from where they are; or 2.
    hope for another deal; no other deal is being
    presented. The real clincher is that in the absence of the
    Blackstone deal and with no other workable proposal in the
    works, BK would be a real possibility. Institutions may
    not feel that stockholders have been treated well,
    but they will vote for the best financial outcome
    available in a 12 to 18 month horizon.

    I think we
    should start thinking about what to do when the deal is
    passed. That is, what's our best exit strategy -- how
    much will the price go up and when.

    JMHO

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • <<<The real clincher is that in the
      absence of the Blackstone deal and with no other workable
      proposal in the works, BK would be a real possibility.
      >>>

      Huh... the ONLY possibility for BK is with teh
      BlackStone deal. Oh, I'll take that back. With these fools
      running the show, they could take this into BK even with
      the Blackstone deal.

      Must vote this down or
      it's all over for the common shareholders!!!

      • 1 Reply to Need_High_Yield
      • that the company could be forced into a better
        deal at gunpoint if they seemed not to have the votes
        for the Blackstone deal and BK looked like a real
        possibility. If company keeps building spec prisons while
        occupancy is problematic, perhaps even more dilution as
        Blackstone demands even better terms. Doc has been pretty
        intransigent, maybe we need to play the game his way and demand
        a better deal for shareholders.

    • conclusion that if this deal passes, the price of
      the common stock will rise?

      Numerous respected
      posters on this board have presented detailed analysis of
      what this rape... I mean deal... would mean to the
      common stockholder. Their conclusions are almost
      universal; all possible upside for PZN's future would be
      transferred to the new preferred equity buying in, some of
      the present investors (the favored inside few) would
      get out with their wallets intact, and the common
      stockholder IRREGARDLESS OF THEIR COST BASIS would own a
      security going forward with no future.

      As the years
      pass, all of PZN's future profits would be drained by
      payments to the new preferred owners. The dominance
      guaranteed to the new investors by board representation and
      voting rights guarantees that no change is ever
      undertaken to benefit the common shareholder- like resuming
      any common dividends or buying back any common
      shares. If this deal passes the common shareholder can
      look forward to YEARS of a dead investment with no
      income and no appreciation, and a management with a
      vested interest in seeing that it doesn't
      occur.

      Any fool who would vote in favor of this deal might
      as well just get out his checkbook and donate his
      money, because he'll never see his investment again.

    • This is certainly the most uncomfortable part of
      the deal, but presumably it was based on some logical
      assumptions about future income.

      In order to reach
      this 18% return, Blackstone must receive some stock
      appreciation in addition to the 12% coupon on their preferred.
      The 18% threshold would be satisfied by a stock price
      of about $8.50. That would mean about 15% annual
      price appreciation for buyers of common shares at the
      current price.

      • 1 Reply to pzn_inmate
      • if I understand the 8-k correctly, the extra 6%
        would be potentially payable if the PZN stock DIDN'T
        appreciate enough. In other words, if after at least 5 years
        the stock hasn't appreciated enough, Blackstone can
        have the company redeem it at a price that kicks up
        the yield retroactively from 12% to 18%. CCA can also
        elect to redeem the stock on the same terms if for some
        reason it would be to their advantage and Blackstone
        hadn't converted.

 
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