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Corrections Corporation of America Message Board

  • flipper_58 flipper_58 May 19, 2000 12:18 PM Flag

    been picking up some pref. A

    At 20% I think the risk/reward isn't too bad. I'd
    like the change to review CCA's books but the
    occupancy numbers seem to be holding which is the key. If
    they had fallen into the 60-70% range I'd be very
    worried.

    Sure the preferred will not have the bang the stock
    might have but the recovery rate will be much faster
    then the common especially with the amount of paper
    PZN is issuing in the coming months. The more paper
    they sell, the pref.A gets stronger and
    stronger.

    If PZN gets thrown into BK it's still should not be
    a total loss as there should be enough assets to
    protect the value of the preferred mostly.


    If
    the story works out in the long run, I'll have a 20%
    piece of paper year in and year out....I can live with
    that.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • chances these days of going into BK -- with the recure offers that are on the table...?

      Thanks in advance.

      • 1 Reply to NoonanGF
      • The chances of BK are a lot higher then I think
        people believe IMO. PZN has not been paid yet this year
        by it's ONLY tenant. And it's only tenant is in
        default of it's own loans too. PZN WOULD be bankrupt if
        it were not for this PL involvment. If PL backs out,
        PZN will file the next day, IMO. They don't have a
        choice.

        The good news is the bankers can see the cash flow
        and occupancy has held together. If they file for BK,
        I think the bankers would be shooting themselves in
        the foot. Who will take over? Who do you sell these
        prisons to? Gov't's can't whip up money as quickly as
        privates. That means a LONG drawn out process as I see it
        if PZN files. I think in a normal situation we would
        of seen the bank group have less patience. But
        others here I'm sure have more knowledge than I on this
        subject.

        I think we learn a lot in the up coming filing for
        the rights offering and the proxy for the CCA merger.
        I would have expected them out by now. The past
        numbers are so confusing and only half complete (CCA's
        numbers). CEO Beasley mentioned EBITDA(earnings before
        interest,taxes, deprec., amort.) of $39mm for the last quarter,
        but that still puts them at a loss as a C corp. PZn
        had interest expense of $32mm and a pref. dividend of
        $2mm so that leaves $5mm or so before non-cash items
        like depreciation, amort., etc. In other words they
        are about break even on paying out hard cash. I guess
        you could call that a start.

        The $200mm should
        get the rest of the beds finished and give them some
        breathing more to focus on occupancy issues and expenses.
        They paid out soo much in fees to everyone under the
        sun, that alone would make a big differnce for next
        years numbers.

        I own very little common but have
        been buying the pref. A lately as I think the common
        will be dead money for awhile.

        I mentioned
        awhile ago I thought the chances of BK at 20%, I would
        increase that to 40% now. Since I feel if PL backs out a
        BK will be filed the following day. I don't sense
        there are any more outside investors that have stepped
        forward at this point besides PL. Most like to wait for
        BK and try to get the company for a song.

        Of
        course just my humble opinion with a lot of guess work
        attached to it.

    • Flipper,

      I fully agree regarding the pref.A and have been gradually accumulating, since we exchanged notes several weeks ago!

    • My average cost is about 10 and there was no
      benefit from buying early. The proxy should be out soon
      and it will include a fairness opinion and some
      financial projections. The last proxy included a forecast
      EBITDA over $600 million five years after the
      recap.

      The company is not bleeding, but will find it very
      difficult to make operational improvements before the recap
      is funded.

 
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