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Corrections Corporation of America Message Board

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  • sundowner998 sundowner998 Jul 12, 1999 10:19 AM Flag

    Please Post in a perspicacious manner

    You are obviously convinced that lack of
    independance between PZN and OPCO is not a problem. However, I
    think you are in the minority. Actually, it dosen't
    matter what you or I think but what the market believes.
    You should question some of the analyst who
    downgraded the stock. The ones I have spoken with see this
    conflict of interest as the main problem. The inability to
    raise adequate junk debt and concerns about securing
    the LOC increase are only syptoms.

    When I
    hypothesized on the potential value of PZN with a more
    realistic 16-18% ROI on new prisons, I was refering to
    future leases. Go back and read my previous post. This
    would not effect current leases already negotiated. PZN
    would only renegotiate existing leased if OPCO were in
    serious financial jeopardy which I don't think we are
    near. In fact, ROI has already declined by some 200
    basis points under the new fee
    arrangement.

    Obviosly PZN is very much dependant on the financial
    health of OPCO since it account for 88% of their
    revenue. If the market wasn't concerned about OPCO, PZN
    would trade much higher with a yield below that of CPV.

 
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