This is the 2nd class action. The group gets an 18% dividend if the stock doesn't go up, and if it does they get the option to buy at 6.50 (can't remember the actual number). OPCO and PZN are 2 different companies. Of all the companies why was it OPCO the one that caused the problems in the first place that we have to merge with. I would rather merge with one of the other private prison companies or liquidate. Preferably we would get rid of all involvement with OPCO and go alone.
With or without Blackstone, et. al. the stock probably will go up IMHO. However, it would go up faster with a CEO that is pro stock holder, rather the a CEO pro OPCO.
The debt and cash flow according to the balance sheet, is not too bad. However, things may be worse that I think and in this case Blackstone, et. al. may be the savior and not the type I think they are.
Now that everyone has read the 8-K lets stop saying that Blackstone can convert at $6.50. The convertible price is subject to downward adjustments (surprise-no upward adjustments) not all of which I fully understand(legalese). For example if PZN makes a series of payments totaling $50 million because of securities litigation the $6.50 price will adjusted down. Two $25 million settlements or judgements over the next couple of years and Blackstone(Investor Group) could convert at a price far less than $6.50. The covert. price would be adjusted if PZN ever made a dividend payment or issued securities although that shouldn't happen because Blackstone will effectively control 6 of the 10 board seats with no members of management on the board(can attend meeting but no voting rights). Even buying at $5 I'am still at a loss why anyone would vote yes to a deal which cedes so much control to the investor group at fire-sale prices. If you are buying at $5 hoping to ride it to $6.50 and pocket 30% I can understand that. Hopefully some of the buyers this week are looking to protect their interests and will vote no and hold out for a less dilutive deal. Looking forward to see how the board will sell this deal at the CC.
I'm not sure why Blackstone would ever want to convert...guaranteed 12% return in the preferred or 18% compounded retroactive to investment date in certain circumstances. Those circumstances can be triggered by certain things over which Blackstone will effectively have control.
Why would you convert unless the stock soars out of sight.And what are the chances of that happening when they will be paying $50 in preferred dividends annually.Where's the cash going to come from to continue the growth.