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Corrections Corporation of America Message Board

  • Come on over to the HLTH board. If you're not welcome here, we sure welcome you there.

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    • Thanks for your posting. It looks like quite a
      puzzle.

      The PL agreement is pretty tight. PL can walk away if
      closing does not occur by 9/15/00, but that's a long time
      from now. Their only other escapes would be failure to
      settle the lawsuits and failure to negotiate the bank
      facility. The litigants cant press too hard because this is
      their best chance to recover any money. The banks cant
      press too hard because they would really like the
      rights offering behind them. PL's only other exit would
      be a claim of material change, but the facts dont
      seem to support this. PL does not have a termination
      fee option. Perhaps this rumor is being encouraged as
      part of a negotiating strategy with the banks.

    • In response to posts from le chacal and pzn
      inmate I'd like to clarify some predictions I made last
      evening. First, the banks are between a rock and a hard
      place. If they cut PZN off at the knees now then it
      jeopardizes the BOP contract and possibly sends the whole
      thing into Ch.11. PZN is currently in default on its
      bank agreement and is not able to borrow under its
      revolving credit unless these defaults are cured. I believe
      the banks will amend the credit agreement to cure the
      defaults and this will provide PZN with the necessary
      liquidity to get through the balance of the year. Next
      comes the BOP contract. I, like most everyone else on
      this board, will believe it when I see it but I think
      it should happen in the next 30-45 days. We shall
      see. Finally, PacLife. I mentioned that they may walk
      away. I don't know why PL would do this but to quote
      the gossip columnist, Cindy Adams of the NY Post, "is
      what I'm hearing". I think PL would expose themselves
      to some serious lawsuits if they did this but it may
      just be that PZN does not need to do the rights
      offering at these prices if everything else breaks the
      right way. It's very hard to predict what will happen
      here and I'm not sure my handle on this is better than
      anyone else.

    • Re: bankers, yes, unlike you and I, the banks
      have a big stake in PZN so they do "hang around", but
      what I see is that CCA is a totally viable entity that
      can not only keep current on its' bank debt, but
      totally repay it with its' strong cash flow over time. In
      short, at LIBOR +3.75%, it's a great cash cow for the
      banks. On CCA rent, you are right, but when Humpty
      Dumpty gets put back together again, there will be no
      rent payable by CCA to PZN, hence, the reunited
      company will have cash flow sufficient to meet its'
      interest payments and operating costs and still expand. I
      had thought that the FBOP contracts would not come to
      PZN until such time as the restructuring was
      completed and the Feds could see we were a viable ongoing
      operation. What my sources and apparently Brendy's are
      indicating is that management has done a good job of
      reassuring its' clients that the current financial
      difficulty will be resolved and that CCA will continue to
      serve them, that the Feds are in desperate need for the
      space, which even the best offers of CCA and WHC will
      not satiate and that we are finally nearing a point
      in time when even red tape cannot delay the
      inevitable. In short, there is no other answer for the FBOP
      that is doable. On litigation, I do, but as
      negotiations are not finalized, and I certainly don't want to
      screw them up, I have no intention of revealing what I
      know. Let PZN announce any settlement, when it can. As
      I have said, I do believe good progress has been
      made. I hope the parties can agree to settle on what I
      think will be viewed as reasonable terms by
      shareholders.

    • Thanks for the analysis. Isn't PZN in the
      position of a creditor who owes so much that the banker
      has to hang around in hopes that things will work
      out? If I'm correct, CCA isn't paying rent, so PZN has
      no income. The banks could foreclose, but do they
      really want to be in the prison business? Regarding
      FBOP, this is large, but seems always to be on the
      horizon. What's holding up the decision? Federal prisons
      are about 25% over capacity, and what will FBOP do
      with the money if they don't make a contract award
      reasonably soon? I assume the money for the 4,900 beds is
      programmed at FBOP, not being moved to another use. Finally,
      do you have an estimate of PZN's exposure in the
      litigation?

    • The way the rights offering is structured now
      there is no guarantee the rights offering could be 100%
      done by shareholders. By making one simple change,
      having the exercise price of the right be fixed at the
      END of the rights period versus the beginning and PZN
      wouldn't need PL. The problem with this strategy is the
      stock would probably hit $.50 in the process as the
      Arbitrage community could easily do the whole deal.

    • It's the outstanding lawsuits contingency. If
      these aren't resolved soon, PL will have to decide
      whether to follow through in spite of the lawsuits or
      walk away.

      If they take too much time making
      up their mind, Brendy's credit facility and
      occupancy predictions could easily come to pass. Then, it
      could become a question of whether we even want the
      rights offering.

      And, if PL walks, what happens
      to the re-merger and credible new management
      conditions?

    • ...I appreciate it. These boys just can't stand to play hard ball with the girls and loose can they? Good luck with HLTH. Girl Rule!, Vel

 
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