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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
    • by my calculation. I believe this is less than the dividends received last year.

      Now we need more big names to jump on the band wagon.

    • First, the expense of defending the lawsuits will
      not be paid by insurance. They will be paid by the
      corporation. Second, Doc, the other officers, and the board
      will be protected by an indemnity agreement providing
      that their expenses and damages will be paid by the
      corporation.

      In order to prove fraud in a civil case,
      the case would have to proceed to trial (unlikely)
      and would have to meet the heavy burden of proof for
      fraud. It is very unlikely that the corporation would
      let the cases go that far. A settlement short of
      trial would leave the issue of fraud undecided, and Doc
      would be indemnified.

      The Pac Life deal will
      also help get Doc off the hook, though I would hope
      that Pac Life will take charge enough to make sure
      that Doc isn't given a platinum parachute, and that
      new management is required.

      Wile E.

    • The insurance companies only pay if there's"no
      fraud" ...Doc and Jr. and who ever else they catch in
      the "fraud" (and IMO,it is)will have to pay their own
      legal bills in the end.
      Plus, they will have to come
      up with there share of the damages...not just the
      shareholders....The worst is yet to come for those 2
      scumbags.
      DUMP THE DEAL!

    • 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.

    • 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.

    • I don't believe you can short a stock, once it goes below $5.00 a share. PZN is now short-proof, insofar as new short ositions are concerned.

      Wile E.

    • Strong support underneath the market today.


      The drop seems to have cleared out nervous holders
      and also thinned out the pessimists on this
      board.

      Predictions that it will go to $2 don't make economic sense.
      Even an orderly liquidation of company assets would
      bring more than the current share price.

      My
      guess is that the stock will float between 3 1/2 and 5
      over the next 3 months.

    • Just checking the board and the latest price
      moves since my last month self
      evaluation.

      Someone said at the time I was too negative and should
      say something positive, well I am sorry but I have
      nothing good to say. LAst month I was looking for a price
      rebound from potential new unexpected developments. Not
      anymore. The technicals have degraded further and some of
      you may still laught but I am still sticking to the
      penny stock valuation from what I see.
      What i do not
      understand is why some of you spend so much effort trying to
      understand such a lousy and messy situation where nothing is
      to be gained one way or the other. As I said in
      December, I moved on network backbones and electronic
      chips. I already made up my PZN losses with CS, RMBS and
      HLIT. I did miss NN.
      It is still not too late and it
      easier than trying to figure the details of this
      nightmare were it is so obvious that shareholders are the
      fools.

      Many of you want the Crants punished. It will not
      happened. It never does. These guys have "financial
      diplomatic immunity". They always have it setup to get the
      cash. Everyone inside gets to benefit, no matter what.
      They are insiders. Instead fo being very wealthy they
      will just be wealthy (no private jets).

      Deal
      with it and move on for your own good.
      The only way
      to get vindication is a lawyer who fights solely for
      the rights of shareholders and not for profits. You
      show me such lawyers and I'll hire him/her for my own
      accounts.

      the way it stands is :
      1) Deal approved:
      shareholders are screwed and price upside is limited to short
      term profits that Blackstone considers ok for
      themselves.
      Shareholder loses long term.

      2) Deal
      is shot and everyone will play hardball. Shareholder
      loses short and long term since no one knows how bad
      the crooks will make it to get their way. Shareholder
      will lose and price is graranteed to take further
      dive.

      From what I see so far, option 2 is in. Therefore at
      $4 the stock is a short for making money.
      If
      options 1 makes it, the stock goes nowhere.

      I
      won't trade PZN anymore even as a short because I do
      not want to contribute to this stupid game run by the
      PZN crooks. Anyone can make better money elsewhere,
      even in bonds. Its easier.

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

      approved?"

      There's no other explanation for a 20% yield on the
      preferred.

      But the technical and liquidity factors are still
      important. Somebody posted earlier that all the growth
      investors were driven from the stock byt the REIT
      conversion. Now all of the yield investors (individual and
      institutional) are leaving the stock. Who's left to
      buy?

      I think the price per bed is the best indication
      that the stock has reached an attractive level. The
      stock should not trade under $3.

      I would be
      happy to see an increase in the size of the rights
      offering as a way to add slightly more value to the
      existing common and to more closely align the interests of
      common and preferred shareholders.

      Somebody wrote
      that it's an issue of "timing." That's the fundamental
      problem: the timing gap between the building of beds and
      the arrival of heads. New equity will allow the
      company to fund its operations until this gap is filled,
      occupancy rises, and the company returns to profitability.

    • going on. I walked away from this deal at $5+
      because it was/is clear to me that NOBODY was at the
      table representing the common shareholders. Still feel
      that way. Blackstone's trying to get the best deal
      they can for their investors, as they should. The
      Investment Bankers simply want any deal to consumate so they
      make their fees. The Line Bankers and Bondholders want
      any deal that protects their interests. OPCO
      threatens to poison the well if they aren't made whole and
      Doc appears willing to give away the store if
      Blackstone is willing to cover his Liability
      concerns.

      So, there we sit hoping that Dreman's going to
      somehow stand up for our rights. Trouble is, Dreman can
      do only what we can do - vote no and hope there is
      something standing afterwards.

      MK, I think the
      collective wisdom of the markets sees it how I do in that
      the common holders are getting hurt so badly that
      they might vote NO. The Market also sees your point
      and really fears that we'll ge a NO vote.

      I
      had all of these concerns when I threw in the towel.
      Unfortunately, that call was the only correct one I made in this
      process. Earlier, I posted that it's "all about
      Occupancy". Well, there's one other factor that has come into
      play and that is "Timing" and I suspect we may be
      running out.

      One other thing the market might be
      telling us. Since I have no ownership position I stopped
      reading the documents so I don't know if it's possible,
      but perhaps there is concern that Blackstone can
      claim things are worse than they thought and they might
      want to renegotiate the deal one more time. Again, I
      don't know if they left themselves an out in regards to
      that point.

      I don't know what I'd do if I was
      holding the common. If I owned a small # of shares I'd
      probably take the prevailing attitude of "screw 'em", I'll
      risk going down with the ship and vote NO but If I
      owned a large amount (large for me) discretion would
      probably rule and at this point I'd see a Yes vote as my
      only option.

      Yes, this could all be bluster
      from doc but if it's not, this thing's going to zero
      with a NO vote because there simply MAY not be time to
      pursue another option. Remember, Doc isn't going to
      sponsor any plan that only brings in cash from existing
      shareholders because he needs the liability protection that
      Blackstone brings.

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