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Corrections Corporation of America Message Board

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  • How to deal with the OPCO shareholders raises
    some pretty tough moral, legal and business
    issues.

    PZN can stiff them completely: declare the 134MM note
    from OPCO in default, declare the rents in default and
    probably take everything (contracts) back. The legal
    proceedings would be gruesome, and I suspect a whole new set
    of lawsuits would be generated (from OPCO
    shareholders, from OPCO's lenders and from PZN shareholders who
    would witness a de-REITing without a vote). It would
    probably also screw up the PacLife deal. Much worse,
    however, would be the impact on existing contracts. Some
    might be terminated and others not renewed. The bread
    and butter of this company must be
    protected.

    The only OPCO shareholders who put money in it were
    Baron and Sodexho, who already had substantial
    positions in old CCA and/or old PZN. To that extent,
    they've suffered along with the rest of us. At least none
    of us had to cough up cash for OPCO. I think we're
    lucky they will step out of the way for their cash
    investment.

    The other shareholders were management and employees.
    They had to pay tax on the stock they got, so they
    effectively coughed up cash, too. With one or two exceptions,
    they were innocent bystanders and ought to at least be
    able to cover their taxes.

 
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