My guess is they'll make it but the stock price probably hasn't seen it's lows. They won't file BR because nobody wins (nobody includes: Doc, PZN, CCA, Banks, Bondholders and Customers). The price will probably drift lower over concerns flipper discussed (rights, shorts, etc.). Again, just a guess as I don't follow closely anymore.
I would like to get your opinion on the income portion of the 10k. It appears to me that there are an exorbitant amount of non regular write offs. Would these guys actually have made a profit without the provision for income taxes of $83 million and other write offs? That being said, it is amazing how much money these inept fools pissed away by their lack of decisive management. I guess the positive is that the majority of the 7 new facilities will come on line in May,and when filled should generate good revenue. That is if you believe what these guys say. Also, did they meet the EBITDA requirements that will be necessary for the investment from Blackstone/pacific Life?
Yes, there were big non-cash charges: in addition to the non(1999)-cash tax charge, they wrote off $14MM of loan fees, $66MM of capitalized fees paid to OPCO (more on that later if I get the time - the tax impact is outrageous), and $76MM of "impairment charges).
The OPCO fees might be considered recurring, because OPCO is still operating at a loss (although its because of the rent being paid to PZN - I get dizzy following the moeny in circles).
I'll try to summarize the combined (PZN and OPCO) numbers later, but I gotta go.
The Blackstone EBITDA requirement is for Q1 2000. More intimidating is the requirement that the class action litigation be settled.
I have not reviewed the 10K very carefully, but I did see that in 1999 PZN had about $30mm income before taxes, but an $83mm "provision for change in tax status". I assume that this means that if we did the PL deal, PZN could actually pay about $20mm cash to common shareholders (operating income minus preferred dividends leaves about $21mm). I do not understand why they want to take this $83mm tax provision and then go out and desperately seek a capital infusion at extortionary terms.
the 83MM tax charge you refer to doesn't go away if the PL deal (or any other deal) is done, and it doesn't go away whether PZN stays a REIT in 1999 or not.
When PZN and CCA merged at the close of business on 12/31/98, CCA was treated as the survivor and old PZN (the REIT) disappeared. New PZN (effectively old CCA) immediately sold its contracts to OPCO (new CCA) and generated a $137 MM gain. This had two adverse tax consequences:
First, it became the major part of old CCA's E&P that had to paid out of new PZN to get REIT status for 1999 (dumb, dumb, dumb!)
Second, old CCA had to pay the tax on it (about $55MM). Because the gain was deferred, the tax was deferred,too, and made up most of the deferred tax debit on new PZN's books. When new PZN started REIT accounting on 1-1-99, the deferred debit had to be written off, and became a 1999 non-cash expense. But the money is gone, and won't be coming back (dumber, dumber, dumber!)
However, even if PZN could now get it back and have a "20MM" operating profit, why do you think they could pay it out? Their major tenant, OPCO, drained $100mm of unforseen lossed (and cash) from PZN, and PZN doesn't have the cash to finish its projects. $20MM is a drop in the bucket.