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Corrections Corporation of America Message Board

  • Y0Y0_99 Y0Y0_99 Mar 30, 2000 7:50 AM Flag

    Flipper, very little PZN is shorted

    Only 155K shares as of 3/8/00. Of course activity
    could have picked up in the last couple of
    weeks.

    Could you please explain the strategy behind shorting
    ahead of the rights offering. I believe I understand
    it, but if it's as I think it is, the risk/reward at
    these prices would be quite unfavorable.

    yoyo

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    • PL is not proposing to inject a nickel, except as
      a shareholder and/or as a backstop. PL proposes
      that we shareholders inject capital.

      If you
      believe that BK is impossible, then PZN is a steal at
      these levels. I have stated clearly that I think BK is
      unlikely and that I am currently holding PZN. However,
      given the surprises we have already experienced, it
      would be foolish to believe PZN BK is impossible.

    • would also come in from the exercising of

      rights that would be issued to existing
      shareholders.
      Pacific Life (and Blackstone
      group) obviously see
      increasing future
      earnings from a growth industry.

    • when Pacific Life Insurance will be injecting
      new substantial capital into the company?

    • Yes, I do think you are right. Full recovery is always very difficult from BK.

    • I am not a BK lawyer, but I do think there is a
      considerable risk to shareholders if PZN goes chapter 11. You
      mentioned CMM. They declared bankruptcy in early October
      1998. Looking at their stock price history, it appears
      to me that at that time CMM dropped from over $10 to
      between $1 and $2, before recovering a bit and then
      slowly sliding back to the $1.5 range that it is at now.


      There may be life after BK for common shareholders, but
      it is almost always worse than life before BK. I
      hang onto PZN because I doubt it will go BK. If it
      does, I expect to lose money.

    • It is very kind of you to remind me that you lost
      money in PZN.
      I happen to know that all successful
      man fails once a while,
      although always and only
      temporarily. I do wish you well on your CMM purchases.

    • I lost a lot of money on PZN, I not sure if I'm
      the right guy to advise you. My advice is to listen
      to the people who have been right all along. When
      they say it's OK I'd listen. I, as many, have had a
      real blind spot here.

    • Remember even the smallest of creditors can upset
      the applecart.

      I've presently been buying CMM
      a bankrupt mortgage firm, they went bankrupt
      because the creditors felt the collateral was not up to
      snuff and asked them to add more. It was not a
      situation they could not pay their interest payments. Look
      at Texaco that went bankrupt, etc..In some cases
      it's just a pause. Creditors seem to have less say, so
      I'm told. BK judges don't want people through out of
      work constantly because of pissed off
      bankers.

      But I'm sure others could comment more completely
      then I.

    • Thanks for your objective analysis. I will hold my position as it is for now.
      If even BK is not the end of tunnel, then I wouldn't mind waiting for a few years.

      Best regards.

    • I agree with everything you have said, except the
      statement that PZN shareholders will do fine over a 5 year
      horizon even if PZN goes into bankruptcy. I think it is
      very unlikely that PZN shareholders would do fine,
      even from these levels, if bankruptcy were to occur.
      BK would imply that the situation is much worse than
      we have been told, for whatever reason. It would not
      be possible to liquidate the company for anything
      remotely close to book value. If that were possible, a
      deal better than even PL's would have already been
      done.

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