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Corrections Corporation of America Message Board

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  • newMK newMK Jul 5, 2000 8:39 AM Flag

    bloomberg link

    "When you pay $20mm for something with more
    liabilities than assets, you had better look at book value."


    CCA and PZN were artificially separated. The book
    value of PZN is comprised to a large extent of step-ups
    to artificial values based on - guess what -
    discounted CASH FLOWS!

    These values came from the
    non-arm's length lease agreements between CCA and PZN, in
    turn based on the management contracts with the
    ultimate customers. A PZN board member was paid $3,000,000
    to bless the valuations.

    Without CCA (and the
    management contracts), the "book value" of PZN is a
    sham.

    This is a single business. PZN is the balance sheet,
    and CCA is the income statement and cash flow
    statement. Don't look at CCA for any balance sheet items.
    Their assets and liabilities for the most part
    disappear when merged back into PZN.

    Paying $20MM
    in PZN stock to recombine the business is peanuts.
    There are far worse things to complain about than what
    the CCA shareholders get as part of the merger.

 
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