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Corrections Corporation of America Message Board

  • reverse_indicator reverse_indicator Nov 2, 2000 9:58 PM Flag

    Occupancy will solve problems

    Real Estate investment management is all about
    occupancy. If the company was cash flowing $2.20 per share
    as a REIT, this same gross should be there again
    with occupancy. It's not like their widget is out of
    style or someone came out with a faster computer. I
    keep hearing that prisons are still overcrowded.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I'm a tad concerned even about a $5 pref A price
      relative to the 12% unsecured bonds trading in the 20-25%
      yield for the bid side. I've learned from a few pro's
      whenever looking into buying into a distressed company
      look at the company debt frist. When the debt
      responses greatly, time to buy the common. Those pro's
      buying after Asia depression played the recovery this
      way. Makes sense as bond holders tend to be more
      fundamentally oriented and professional money managers. I
      wouldn't think about the common until I saw the pref A and
      the debt recover quite a bit. That is a tell-tale
      sign credit investors feel at least the company will
      be around.

      Right now the pref A is trading
      near it's all time low. This does not bode well for
      the prospects of the common in the near term, I feel.
      The debt trades "by appointment" so it's hard to get
      a real market. The bid/offer spread was 20-30
      POINTS! Liquidity stinks there. The real bid is near $.50
      on the dollar.

      I don't mean to sound too
      negative, I'm just trying to be realistic on what the
      "market" seems to be telling us concernng the present
      situation.

      JMHO

    • I'm not flipper but I also own the Pref_A. The
      stated amount is 8%($2.00). Based on the current price
      this is 39% to 48% depending on whether you consider
      that one or two dividends are included in the current
      price. The last dividend was paid in April. At this time
      last year 3 dividends had been paid. Only one has been
      paid so far this year.The dividend is cumulative and
      will be paid at some point unless the comoany goes
      under. There are other rules that involve the placement
      of additional directors on the board to represent
      Pref_A owners if the dividend is not paid for 6
      quarters.

      The Pref_A does not mature but is similar to the
      Pref_B in that it can be redeemed at the option of the
      company after a certain date.

      The complete
      description and rules relating to the Pref_A can be found in
      the numerous SEC filings made by CXW.
      Unfortunatately, I don't think any one of those contains all of
      the info. You will have to read them all to get a
      more complete view of the Pref_A. Somebody with better
      records than I may be able to reduce your search to
      specific filings.

    • Pref A.

      I can't find a website with good
      information about preferreds and listed derivatives. Since
      you hold the Pref A, I am sure you can help with
      basic info.

      What is the stated dividend amount?
      When was the last dividend paid? Does is mature? If
      so, at what price, and on what date.

      Let me
      know of any sites with good info on preferreds and
      listed derivatives (TRACES etc.)

      Thanks for your
      help

    • THANKS again flipper for the answer on where
      we would stand if it comes to BR.
      Let us hope this will not happen.
      THANKS again genepond

    • ""in the case of BR where and how do you think we
      would stand.????""

      Excellent question and the
      most important of all for pref A owners. We stand
      fairly low on the spectrum. I'm not an attorney, maybe
      someone else could answer your question better but first
      the banks and employees salaries, then the $100m
      unsecured debentures and general creditors, then pref A., I
      believe this is generally the order. That's a lot of
      hands out first. At $5 the pref A is trading at $.20 on
      the dollar which probably is high for a liquidation
      scenario. Just my guess. I would guess $.05 to $.10 on the
      dollar as optimistic on a Chap 7 scenario. On average
      banks collect 80% on their senior secured
      loans(according to Merrill Lynch), leaving $0 for the rest
      underneath.

    • flipper 58
      THANK you so very much for the
      information on
      cxw pref A . This has been the best summary
      I
      have yet seen about this stock.
      IT seems to me that
      you have covered the ques-
      tions that I would have
      asked completely, ex-
      cept in the case of BR where
      and how do you think we would stand.????
      Is the
      cxw pref A first to be paid from assets
      left after
      the Banks get theirs or is there
      notes senior to
      the pref A. I have been unable to ascertain the
      answer.
      THANKS again for your time and Courtesy

      genepond

    • If I may butt in, I own some of the pref A too.
      The bank loan syndicate stated that CXW must raise
      $100mm in new equity by year-end. This has become tall
      order. My guess this will not happen by that time and it
      could be easily a year or so when/if you would see any
      dividends on the pref. A. The thing is the dividends
      accrue(accumulate), it's not like a common dividend that disappears.
      The pref A will have $1 of back dividends by
      year-end. Asset sales will be the key to a fast recovery of
      the pref A div., IMO.

      My guess is the bank
      syndicate will want to see CXW in the black on a regular
      basis before any back dividends will happen. This
      CERTAINLY will take time and since you�re not "losing" the
      dividend I don't thing they would feel any urgency to pay
      in a hurry, I wouldn't. They need to use any
      "excess" capital to get facilities finished and ramp-ups
      for the Feds moving in. This is clear and the right
      thing to do, IMO.

      I have not rushed to average
      down as I feel these type situations take a long time
      to work out and we really don't know if it will. My
      guess is the banks will have mud on their faces if they
      force the States and the Feds to possibly RELOCATE 45
      facilities worth of prisoners and then try to sell them back
      to the same customers they just pissed off. In this,
      I make the assumption they will work things out to
      get CXW back on their feet. Think about it, they
      force CXW into Chap 11, then prisoners escape, up-rise,
      etc.(as they will do)talk about the banks getting bad
      press with their �new� customers, the Gov�t agencies,
      ouch. And then they could be looking at Gov�t
      take-overs at fire sale prices. Doesn�t sound very
      attractive does it as an important lender does it with a
      reputation?


      The beauty of the pref A is it's not effected by the
      zillion of new shares created and actually benefits by it
      as they pay in shares not cash for obligations. Tax
      loss selling will probably keep the pref A down or
      heading lower though before its recovery, if CXW makes
      it. The pref A will be far more rapid then the common
      in recovery. If they recover your have a 40%+ piece
      of yield paper(at $5.5 your actual cost is $4.75
      because fo accrued div.).

      JMHO

    • Occupancy is key, but so are margins. We need to
      see the financials re operating expenses (former
      CCA). Are per-bed payments going to be large enough?
      Unfortunately the REIT cash flow doesn't reflect this critical
      piece.

      • 1 Reply to pkn4mom
      • At the risk of seeming presumptuous, I would like
        to give this thread food for thought in two
        areas.

        First, in disclosure, I am significantly long the
        preferred A. That position leads to my first bread crumb, a
        tax notion. Like many long suffering fans, I used to
        be long the common. My accountant advised me that if
        I sold the common and bought the preferred, as long
        as it was not convertible into the common, it would
        not be a wash sale. I am not a tax advisor, so
        confirm this with your own accountant if you are
        interested. My plan is to stand aside until the dilution of
        the common appears to be complete. Kudos to Flipper
        for his analysis of that issue.

        Second, as I
        read the pro forma financials for the merger and
        adding in the expected revenue from the federal
        contracts, I come up with positive cash flow on the order of
        about 21 M for the 3 months ended 3/31/2000. You are
        referred to page 18 of the proxy statement for the
        restructuring. I am adding back in depreciation and amortization
        and allowing about 20 M per quarter from the federal
        contracts. I am assuming there is already fixed overhead for
        the two prisons and admit I do not know how much or
        if that overhead will increase when the facilities
        are occupied. I don't have pro forma numbers for the
        6/30 quarter, but I believe there are so many
        extraordinary items, e.g. merger costs and one time writeoffs,
        that the March pro forma numbers may give the clearest
        picture. I look forward to the release for the September
        quarter.

        Finally, I lost plenty in the common.
        While I sympathize with all those in the same position,
        I would personally like to read more discussion and
        analysis and less complaining.

        Comments would be
        appreciated.

        Redtom

 
CXW
37.90-0.04(-0.11%)Dec 26 4:04 PMEST

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