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Corrections Corporation of America Message Board

  • pzn_inmate pzn_inmate Feb 20, 2000 1:02 PM Flag

    Public Safety & a new deal

    Because public safety is involved, the operating
    business has no hope of winning contracts unless it is in
    sound financial condition. Bankruptcy is not a viable
    option. A large equity investment is necessary. The only
    concerns should be whether the terms are fair and provide
    a basis for the company to restructure its
    operations and return to profitability.

    The
    shareholder vote provides some leverage. It's very difficult
    to collect votes from retail shareholders. If a few
    institutions threaten to abstain or vote against the current
    deal then it will be unlikely to receive the necessary
    majority (although rejection of this deal without another
    deal lined up would leave the company and the stock in
    worse shape than now). I would like to see
    this:

    Blackstone is currently paying $350 million and then
    offering existing shareholders $35 million of their paper.
    I would like to see existing shareholders given the
    right to buy up to $100 million of the Blackstone
    paper. This would:

    1) significantly reduce the
    dilution (as long as you subscribe)

    2) require very
    little modification of the existing deal and therefore
    not impede the company from addressing its operating
    problems

    3) more closely align the interests of existing
    shareholders with Blackstone.

    Blackstone originally
    negotiated for a $250 million investment. Keep them at that
    level and let existing shareholders make up the
    balance.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Would somebody explain what they mean when they
      suggest that PZN might go bankrupt? Obviously, you can
      not go bankrupt by missing a dividend. The only risk
      that I am aware of is that losing REIT status (which
      has not occurred yet) would result in taxes due.
      Therefore, if REIT status can be retained, bankruptcy would
      not be a risk - - correct? Therefore, the only issue
      is whether PZN can pay 1999 dividends in the form of
      securities. That would allow retention of REIT status,
      eliminate the need to pay taxes, and allow the company to
      go forward without new acquisitions on a positive
      cash flow basis.

      • 2 Replies to yieldseeker
      • addressed many times on this message board and
        also by PZN itself. The distributions necessary to
        qualify for REIT status can be paid in cash or in
        securities, though the securities cannot be common stock of
        the issuer itself. Thus, PZN could not maintain REIT
        status merely by splitting the already-woefully
        low-priced common stock. However, PZN could easily issue
        preferred stock of any sort so as to satisfy the REIT
        distribution requirement.

        As to bankruptcy, there is
        the little matter of the $1 billion plus of bank debt
        that PZN owes. Servicing the debt, and even paying it
        back, should be a piece of cake, UNLESS there's
        something more worse going on from an operational
        standpoint than the company has disclosed.

      • OPCO is nearly dead. Without some deal it will be bankrupt. If OPCO dies then PZN dies too. The OPCO problems cannot be ignored. That was Dreman's mistake.

    • Check out CMM-B. CMM is expected to come out of
      BK in April. The $2.88 div. pref. B, trading at
      $14.50, has over $4 in dividends arrears expected to be
      paid in full under the current BK plan(the preferreds
      are "unimpaired" thus keeping them out of the BK
      vote, better to pay them).

    • the stock is still going down because the market
      is afraid the Blackstone deal WON'T be
      approved?

      As someone posted earlier, Blackstone wasn't looking
      for an 18% deal. They didn't have a gun to their
      heads. And I can't believe that anyone has ever done
      more due diligence on this company. They certainly
      know more than we do about it, even after reading the
      proxy.

    • Attention all protection and public safety
      operators and government entities. Shareholders of talented
      builder but incompetent manager of private prisons seeks
      new contracts. Of our 43 up and running
      state-of-the-art facilities 9 are already leased to
      private/government operators so only 34 facilities remain. HURRY
      NOW! Company presently under seige by vulture equity
      investment which threatens to destroy all present and future
      value of common stock so no REASONABLE OFFER refused.
      CALL NOW LET'S TALK P.S. Don't forget to bring your
      bankers because our's will be there as we are now
      conjoined at the hip.

    • Two Texas inmates on death row have taken a

      female security officer hostage this afternoon.

      No other news at present.

    • I wasn't sure which Preferred RAUGAR was
      referring to. The existing or the one to come. I agree with
      your concerns on the current Preferred. It is not
      presently paying nearly enough yield to entice me. While
      the possibility of BR may be low, anyone who says
      it's nil is kidding themselves. I wonder what the
      bonds are doing.

      One other thing, I believe that
      PZN common has a ceiling more in line with 6.5-7.5.
      It seems to me that an investor would either see
      this ceiling (because of the convertibility option) or
      none at all. I don't know someone can arrive at $10.

    • Untrue my man...that's a rule for the great unwashed investor masses that most brokerage firms have but not all. If you're into big time hedging, you can short anything anywhere.

    • I think all along was to screw the common stock
      holders. How can it be any other way when every word out
      of your mouth is a lie. My only thought at the
      moment is that doc goes down with the rest of us. His
      own lies have finally done him in. End of story BK is
      all around . Will put what I have left in STAC
      tomorrow Zero debt good honest company.

    • PZN paid the dividends when it didn't have the
      real income to afford them. It paid until it became
      evident that it could no longer do so. By then, it was
      too late to undo the damage done by paying the
      REIT-inspired dividends.

      The problem I see is that there
      is no really reliable information available about
      the real economic position of the
      company.

      Everyone keeps writing about Doc like he is going to have
      to pay his own legal expenses. The company will be
      paying his expenses, under a standard indemnity
      agreement. That means that the shareholders will pay his
      legal expenses.

      Now, don't that shake the rag
      off'n the bush?

      Wile E.

    • Any ideas for recouping this loss? Don't know
      whether to bail now and save what's left or hang on.
      Surely Dreman is having the same thoughts. If we are
      facing BK, then now is the time to get out. Shareholders
      will be wiped out, mgmnt will get ownership in new
      company and all will be forgotten. Look at Just for FEET.

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