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Corrections Corporation of America Message Board

  • somebodyelse00 somebodyelse00 Mar 31, 2000 3:42 PM Flag

    CCA Negative $200M

    I must have done something wrong. Please help me
    understand this.

    CCA shows a net loss of $200M. PZN
    has to buy/merge with CCA to keep the leases in tact
    because CCA is basically bankrupt. A combination of the
    PZN "cash flow" with the CCA loss equals ZERO.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • that? The market is closed.

    • the impairment of the assets and the deferred
      taxes are one time events that with good management
      will not be repeated. Not so sure about the write off
      of the tenant incentive fees. If I remember
      correctly these were cost generated by CCA to get cash from
      PZN to offset the cost of development of new
      facilites. They still have future development cost that will
      be factored in through higher depreciation if
      capitalized. Also maybe I just missed it but I saw nothing on
      occupancy rates. If the news was good I would think they
      would want to talk about it. Based on the past
      practices of management they want to hide bad news until
      they can no longer do so

    • I share your puzzlement. Why would PZN merge with
      CCA/OPCO? Why should PZN protect the equity of CCA/OPCO
      investors??? The way bankruptcy works is that the courts will
      require the BK entity to honor all its leases where those
      leases produce a positive cash flow. Therefore, PZN
      would see its leases defaulted on its low occupancy
      prisons. However, all leases on high occupancy prisons
      would be maintained. BK courts will not reduce the
      lease payments or alter any terms. It is all or
      nothing: honor the lease or terminate it.

      So why
      would we want to merge with a bankrupted entity?

      • 1 Reply to yieldseeker
      • Does anybody know why CCA lost $150M in 1999
        and/or an estimate of recurring losses.

        My read
        is CCA is a sandwhich between PZN and the value (Fed
        and State payments for service). You cannot take out
        the sandwhich and get rid of the $150M per year loss.
        Therefore we need to take $150M (or the recurring loss) per
        year out of PZN's EBITDA to get a true sense of value
        here. If you do that, PZN is on death row.

        On
        the other hand, Fortress and PL, must have seen these
        numbers and according to the same 10K, they are still
        interested.

        I think they structured CCA to be too dependant on
        growth, hence the 84% occupancy. Capitalized construction
        costs of PZN must have been the projected income of
        CCA.

        I don't know, but I'm worried now.

    • And negotiate its own leases?

 
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