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Corrections Corporation of America Message Board

  • r7ualj r7ualj Apr 28, 1999 9:56 AM Flag

    Bad News!!!

    My sources have indicated that the inmates at the
    CCA-operated South Central facility have taken over the
    prison. This is the same facility that has had a number
    of escapes over the last few months. I'll keep you
    guys posted.

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    • don't you find it interesting that our paths have crosses again?
      Sure you're not from n'vegas?

    • even I'll stop paying any attention to you. Yes..
      just remember
      that while you're throwing dirt at
      PZN you're slowly losing ground. You are on the wrong
      side. Is it possible for you to change dugouts or are
      you simply STUCK in place.

    • what's up Doc?

    • Could it be that Wackenhut is crying the blues
      because PZN got 90% of the domestic business, as reported
      in the CC last week?

      BTW, PZN just printed
      22, on its way to those "mid20s". May will be a good
      month for PZN longs, methinks.

    • Thanks for the information. PZN is crushing the competition.
      Be sure to post on the WHC board.

      Stephen Pounds Palm Beach Post Staff

      The Palm Beach Post

      Page 8D
      (Copyright 1999)

      Wackenhut Corrections Chief Executive George Zoley on
      blamed his company's depressed stock price since
      January on a dearth
      of new contracts and bad press,
      and predicted it would jump sometime

      Zoley spoke to shareholders at the company's
      annual meeting Thursday
      at the Ritz Carlton in

      The company's stock price hit its high for the
      past year, $28.63 a share,
      on Dec. 31, and fell to
      $15.88 on April 14. But if Thursday's closing
      is any indication, Zoley may be right. Wackenhut
      (NYSE: WHC) ended the day at $19, up 63 cents a

      Zoley said Wackenhut Corrections was awaiting
      decisions by state
      legislatures on privatizing more
      prisons, and many of them meet in the
      first quarter of
      the year.

      "The first quarter is a period of
      inactivity on the part of states deciding
      about new
      privatization contracts," he said.

      He said the stock
      also has suffered from negative news stories about


      "Typically, they are union-sponsored type
      articles," Zoley said.

      In February, about 125
      publicly employed correctional officers
      protested in
      front of the Wackenhut Corrections Corp. headquarters
      Palm Beach Gardens against the conversion of
      public prisons and jails
      to private management. The
      protest was organized by Corrections
      USA, a nonprofit
      advocacy group, and the correctional division of the

      state's Police Benevolent Association.

      Ginsberg, a Wackenhut Corrections shareholder, suggested
      stock might have fallen because of the creation
      of Correctional
      Properties Trust, a real estate
      investment trust formed in April last year
      by Wackenhut
      to buy prisons it builds.

      Zoley denied that,
      saying contract announcements in the second quarter

      would bring attention to the company and boost the
      price of the stock.

      Wackenhut Corrections also
      disclosed first-quarter results Thursday.

      reported a 37 percent increase in revenue to $97 million
      from $71
      million in the first quarter of 1998. Net
      income rose 44 percent to $4.8
      million, or 22 cents
      a share, compared to $3.4 million, or 15 cents
      share, before new accounting measures were
      adopted. After instituting
      new accounting practices,
      earnings were restated and the company
      showed a loss
      of $8.1 million, or 36 cents a share, for the first
      of 1998.

    • Wow, RP, what a great post. Great analysis, great
      advice, great balance - a model for everyone. I bet
      you've only been married once.

      Cleo, I was
      worried that you tried following me to Serbia and got
      detained. Nice to have you back, especially in such gentle
      tones. I will agree with you about old CCA being able to
      do the debt deals, too. In fact, Anderson1 even told
      us that it was CCA's credit power that would give
      the newPZN enhance capital raising ability. Last
      summer I begged Anderson to tell Doc to "Do the merger,
      drop the REIT". I still feel the merger was important
      and necessary to un-split the business (private OPCO
      makes it work). But I still wonder how paying out
      almost a half billion dollars this year in dividends
      enhances the company's credit standing/market value. At
      least I get my piece of the half-billion.

    • No investment like this is a no brainer.. This
      stock was once 40+ and is now 20+. I like the PZN
      prospects, but if this was really a no-brainer everyone
      should sell the house and buy lots more. not so.

    • You think stoppage of equity sales was a tacit
      admission by the management it is STUPID to continue doing
      so at such depressed prices - I think everyone would
      agree with this message but others might say it
      differently. Yes, management recognized the stock is
      underpriced and stopped the sales because while they aren't
      technically dilutive, debt financing is financially preferred
      given this stock price and the present cost of

      Why couldn't the same thing have been done in the
      'old' CCA skin? IMHO, in RETROSPECT I think you might
      be correct. However, you have to remember that at
      the time Doc made the decision, REITS were money
      magnets. Raising equity was very easy for REITS and Doc
      was no doubt heavily influenced by the huge stock
      price appreciation seen in the original PZN. I think
      Doc saw the coming decline in management contracts
      and correctly saw that building/owning facilities was
      going to be the game. This of course would require a
      huge amount of capital.

      Why do I say you
      "might" be correct? Let's be realistic, when CCA was $40
      a share, industry and company growth was forcast to
      be 35-40%. If Doc had done nothing and the (industry
      and company) growth dropped to ~20% as it now is,
      what would have happenned to CCA stock? 20 sounds
      about right to me. So CCA would be out there right now
      faced with today's same challenge - issue equity @ $20
      or hit the debt markets.

      So in retrospect, it
      seems that a whole lot of pain and gyrations were gone
      through to get to where we are now but I think we would
      have been here (~ $20 a share) either as old CCA or
      New PZN.

      I think Doc made the best possible
      decision given the available information at the time. He
      couldn't forsee the unprecedented disdain investors
      started showing REITS last year. I suppose he is guilty
      of that. He also couldn't maintain the company's and
      industry's 40% growth rate. Guilty as charged here

      The bottom line is that "we are where we are" and
      each investor or potential investor should make their
      decision looking forward. I've benefitted from your
      previous posts and look forward to the future ones. They
      need not be Happy posts; critical posts are much more
      useful than cheerleading posts but let's concentrate on
      today's and tomorrow's challenges. Plenty lay ahead.

    • If you don't understand the brillant move that
      Doc (President of PZN) pulled by creating the REit,
      just look at Wackenhut (WHC) which is cutting their
      dividend completely out, because the industry's growth
      opportunities. The want to use cash that was being paid out in
      dividends to fund their growth. Wackenhut will also pay
      Corporate Taxes. PZN on the otherhand will grow at 30%
      because of their ability to fund growth with appropriate
      debt. No corporate taxes and positive leverage on their
      debt. This stock could see 45 to 50 in 18 months.
      Meanwhile, just keep clipping coupons.

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