I think NewMk's arguement, and PaineWebbers
arguement is that the dividend could be paid throughout
2000 for 1999 earnings. If this is so, then PZN could
be a C corp in 2000 and pay out its dividend for
1999 throughout 2000 while also retaining enough cash
I see a cash dividend being
paid from earnings of PZN as a C corp and blackstones
cash going into projects.
made complicated. That stock buyback was a
publicly announced purchase of stock by officers and
directors of PZN and CCA. For some reason I never
understood (double positive PR impact, perhaps?) they ran
their purchases through the company.
I don't remember a company buy-back right before
the vote. I do distinctly recall (and flipper will
also) that 3 days before they released Q3 or Q4
earnings Doc made a glorious announcement that he and
others had bought stock personally. It struck flipper
and I as strange because we thought they were in a
quiet period. We were in CCA at the time and it brought
the stock back from $16 to $22 in a few days.
NewMK, you may be right on the disclosure and
related issues just prior to the merger vote. What has
always seemed curious to me is that the company did a
stock buyback just before the merger vote, apparently
to get the price up and put a positive spin on the
merger. Now, whenever the question of a buyback is raised
(by stockholders), the answer is always that the
company needs its funds for expansion. We all know the
answer to that one. But if the class action firms can
build a case for deception prior to the vote, the
buyback would seem to be part of the fabric, no? I
thought it a good idea at the time, I'm sure others did
too. A company believing its own stock was a bargain.
Whatever happened to Doc's belief in the value of his
All they are obligated to pay is what they have
declared, and they have have paid those. The classification
is controlled by tax rules, which in turn contols
the timing options. But no matter what, they can't
pay anything if they don't have the cash. Borrowing
money to pay dividends always seemed stupid to me.
Worse, then the lenders control whether the dividends
can be paid.
As far as legal exposure, who
knows. There will be lawsuits whether they are justified
or not. To me, to and some non-ambulance chasing
lawyers I've talked to, there may be more exposure in the
disclosures surrounding the merger: miscalculation of impact
of leases on OPCO, hidden occupancy problems,
delayed disclosure. I hope that whoever is already suing
has included the investment bankers and anyone else
involved in setting up the lease terms.
I hope you are right. However, I am losing all
respect for David Dreman. Supposedly, he has owned PZN
for a while now. It was a top holding of his Kemper
Financial Services fund as of Sept 30 - Look under
www.kemper.com and you will see it. I wonder what he has done
since ? He mentioned it in Forbes twice in the last few
months, but recently there has been no mention in his
Forbes column. So I hope Dreman is right because
otherwise, his "High Yield" fund will become the "LOW Yield"
fund. By the way, what is I.R. ?
The remainder of the special dividend will be
paid this year. I specificaly asked that question to
Kerry at I.R. a few days ago, and she said it would be
paid. They are using the 1.80 previously paid and that
I think they are obligated to pay the
but are deferring it as long as possible.
try some other ruse they will be in trouble.The
changing to a C corp. if it happens will not be immediate.
I agree with NHY the institutional buyers want the
yield. Dreman recently bought a few million shares for
his high yield fund.
One thing that has always concerned me about
Junior's assertion that the dividends paid out so far can
be used satisfy the requirement of the special. INL
(I'm no lawyer) but one could argue that declaring 55
cents as a regular dividend from FFO and a nickel
toward the special reasonably establishes an expectation
that the rest of the "special" will be paid by year
end, as promised in the merger documents. We have been
entitled to the "special" under the merger terms, and it
is by definition different from the 95% of FFO due
as a reit. Thus, it seems that Doc and company
cannot relieve themselves of the obligation to pay out
the $1.60 or so balance on the "special" dividend by
pointing out that $1.65 of regular dividends have been
paid out. The company "intends to qualify as a reit,"
thus the 95% of FFO. The special is a term of the
merger agreement. Seems to me that the word "fraud"
might apply here, IMO. Can anyone nelighten me on this?