Raugars $2.00 likely. . . . Prison Realty, which is fighting several shareholder lawsuits, states that its own auditors have taken the highly unusual step of questioning whether the firm and CCA can each continue as a "going concern." Put into English, that means the bean counters are wondering whether this company is headed for death row or is a candidate for rehabilation
�"It sends up a variety of red flags," said Milwaukee corporate attorney Rick Bliss, who noted that he wasn't familiar with the Prison Realty situation but is an expert on the kind of financial language used with the regulators. "Somebody is warning you that either there is an impairment of capital or that there are other problems that are calling into question the future survivability of the company."
Wall Street analysts who track the firm say the news out of Nashville is increasingly bleak.
"The major news is the deteriorating financial condition of CCA," analyst Jerry Doctrow told The Tennessean newspaper in Nashville. "That puts additional pressure on shareholders to choose between this equity investor or the risk of bankruptcy."
Prison Realty is urging shareholders to approve a massive restructuring deal that would infuse $350 million into a new company that would merge CCA, Prison Realty and other entities.
The proxy statement sent to Prison Realty shareholders appears "to be painting a pretty bleak picture in order to get this deal approved," said analyst James Macdonald, who said the company isn't in danger of shutting down.
This would be the second major shake-up of the firm in the just two years. Some shareholders charge that the first one simply enriched corporate insiders and created the very problems that now dog the cash-strapped company.
So do Wisconsin authorities have anything to worry about? Is it time for the state to put the company on probation? Wisconsin, after all, has about 3,300 inmates in CCA prisons in Oklahoma, Minnesota and Tennessee.
"Management of the company is clearly in turmoil and clearly has other things to worry about than managing the prisons that have Wisconsin prisoners," Macdonald said. "It's a situation for Wisconsin to monitor."
At least one state agency, the State of Wisconsin Investment Board, was keeping tabs on the situation. SWIB sold its final 200,000 shares of Prison Realty stock last week, resulting in a $7 million loss. That's on top of an $11 million loss it posted on the stock in 1998.
Can you trust bean counters hired by Doc? Normally management would pressure accountants to be optimistic, and the accountants are supposed to resist that pressure. But if management wants the bean counters to be "conservatively" pessimistic, they can do so without much risk of criticism later.
Pay attention to analyst James Mcdonald, who is quoted as saying that the proxy appears "to be painting a pretty bleak picture in order to get this deal approved". Macdonald also says that the company is not in danger of shutting down.
It just happened to coincide with his negotiations for a divorce settlement with Marla Maples, did it not?
As 'luck' would have it, shortly after Marla's lawsters agreed to a scaled-down deal, and signed on the dotted line, clouds parted, the sun came out, birds started singing, and the rainbow (complete with pot'o'gold) appeared. TheDonald was back on the shiny side of the street suddenly, purely by accident.
Why should we suspect anything underhanded here? Certainly the track record of honesty and straightforward representations of financial status speaks for itself, no?
Trustees May Arbitrarily Conceal Killer External Revenues