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Corrections Corporation of America Message Board

  • ewocfo ewocfo Dec 8, 1999 4:31 PM Flag


    Has anyone seen one of these yet?

    Baby Doc say they had to distribute a prospectus
    before the dividend could be paper?

    Have we
    reached the drop dead date for getting a prospectus out
    and declaring a year end deadline?

    If we are
    not getting a prospectus, it seems to me that
    eliminates certain possibilities, one of those being a paper

    Whatcha think crew?

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    • My recollection of the August conference call in
      which this was discussed was that the REIT rules
      require PZN to give shareholders a choice of paper, and
      that essentially PZN will have to put out a proxy
      statement with disclosure about the different securities.
      It was for that reason, Baby Doc said, that any
      decision about paper vs. cash would have to be made well
      before year-end; I seem to remember him saying that
      shareholders would have to be solicited beginning with a
      filing in November to have enough time to get everything

      • 2 Replies to bettyboro
      • I agree with your collective recollections. I
        wonder if "the answer" is that management needed to
        distribute a proxy if there was to be a choice but now we've
        essentially been told that the Special Dividend has mostly
        been paid (we thought it was the common dividend)
        already. I would assume that the balance of the Special
        (whatever that amount is?) will need to be paid in cash
        this year since it's too late for a proxy. However,
        this would seem to be in conflict with the credit line
        covenants, which required a SI if the special is to be paid
        in cash.

        I wonder if that's why Lehman left.
        Doc told them of his plan (the Special has mostly
        already been paid) and they told him he couldn't do that
        because it's a violation of the covenants of the loc THEY
        led. I'll bet Lehman had no choice but to quit.
        Interesting scenario, but I don't know what it portends for
        the future.

        It seems a bit surprising that
        we've not heard anything from the banking group.
        Normally, the group would advise the client that they are
        outside the covenants and that information, being
        material, must be divulged to shareholders...unless PZN is
        hiding behind "a quiet period".

      • Isn't an 8-K rquired to be filed with the SEC for
        major financial changes? Or is 10Q disclosure

        The company has confessed that its major tenant
        cannot meet its lease obligations without raising some
        money (as reported in the 10Q). Similarly, the company
        obviously is in danger of not meeting the requirements for
        being a REIT as of the end of 1999. If there is any
        plan at all to de-REIT, it seems that it would have to
        be disclosed in an 8-K.

        Since we don't have
        an 8-K saying that, can we then assume that they
        WILL meet the requirements by 12-31-99 (i.e. the SI is
        about to be announced)?

    • These guys need to be put in their own prisons!!! Where's Gordon Gecko when you need him?!!!!

      • 1 Reply to stevemyrlin
      • According to many posts here, there is nothing to
        worry about because the co. is worth $20 or above on
        the paper and in their minds.
        They somehow forgot
        to remember leson 101 of investing: that is a co is
        only worth what someone will pay for. Like everything

        So following on that trend, assuming they are right,
        they all must be selling the farm and invest in PZN
        right now, like "prisonanalyser". Am I

        After all I figure that from $7 to $20 in 10 months is
        potential to get rich if you put enough money into

        By the way you'll get my shares soon and I ll leave
        covered in blood but not dead (that is for those who do
        not see the knife coming).

        I am just staying
        at this point because $7 will hold another week and
        by then who knows a dead cat bounce of a point or
        two if dividends get paid may remove some blood. And
        to be honest I am really curious about how they'll
        cough up the "dividends"

        Faith is a beautiful
        but sometimes a deadly thing for those who

        And by the way where is cleo who has such eloquent
        discussions about the GREAT REIT?? She probable bailed whiel
        the others who bought the arguments, like me, have
        bled to death. Many who appears to have good
        intentions here have been mislead by PZN management and some
        still are doing their dirty work may be

        getting excited if it goes up 1/2 point.

    • They now have to pay whatever is required as
      regular REIT dividend to qualify as REIT.

    • But one reason I love trading on the internet (as the joke went in Barron's) nobody knows all your stupid mistakes...ssshhhhh.

    • I didn't realize dividends payed on the Preferred
      "counted" towards the 95% hurdle amount. Makes sense, the
      thought just never occured to me.

      No idea how
      stock holders would react to the news of not getting
      the common dividends they thought they'd get for
      1999, but if you consider:

      1) Special is mostly
      2) Preferred Dividends count towards the 95%
      EPS "games" can be played between OPCO and PZN for Q4
      (to reduce PZN's Q4 EPS)

      the amount of the
      common dividend due by 1/31/2000 might not be that
      large. Liquidity issue might not be as bad as it looks.
      As I've said before, even if PZN has violated the
      covenants, if the net result is less new cash/value going to
      shareholders, I doubt the banks will complain.

      course, the above actions would hurt credibility but
      let's face it, hard to get any lower than we are now.

    • Tax loss selling is killing REITS.

      The underlying business is worth more than
      $18 in my opinion.

    • It's easy to get rattled with the beating we're
      taking, but I don't think you can have it both

      Either PZN is fundamentally sound and Crants has done a
      miserable job of convincing the Street, or something awful
      is on the way and the Street is correct in
      anticipating it. Personally, I choose the former.

      Remembering Ben Graham's dictum that the market is a voting
      machine in the short run but a weighing machine in the
      long run, I can't wait to see what PZN really weighs!

    • You're right. Sorry chrome but REIT status
      requiremants are determined to be satisfied by the IRS. The
      IRS only sees tax returns, not GAAP

      Actually, the 95% rule has some adjustments from actual
      taxable income but they are not that important unless
      you're selling properties at a gain.

    • Regarding comment: 3) EPS "games" can be played
      between OPCO and PZN for Q4 (to reduce PZN's Q4 EPS).

      This can be generally true under GAAP or financial
      accounting, especially if it is downward as GAAP in very
      conservative. But, you are dealing with TAX, and the IRS is
      very aggressive in ensuring earnings are stated at the
      highest levels. I believe FFO is referenced as a
      guideline and may be used for dividends, but the underlying
      requirements are based on TAXABLE Income.

    • They are not returning phone calls.

      I do maintain that there is fundamental value
      here but I disagree with how the company has
      handled this decline...

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