% | $
Quotes you view appear here for quick access.

Corrections Corporation of America Message Board

  • newMK newMK Jan 27, 2000 5:01 PM Flag

    olddaddygram - I almost forgot...

    one significant reason why I haven't sold all of
    my PZN. I have kept comparing PZN/CCA to VTR/VC
    (Vencor), which I suspect you're familiar with. Vencor
    seems to have had far worse problems than PZN, but PZN
    has been punished in the market essentially to the
    same extent. Thus it would seem that PZN is
    undervalued. If you've followed Vencor, I'm curious what you
    think about the comparison.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Typically government contracts provide that if
      the vendor declares bankruptcy, the government can
      declare an event of default and terminate the contract.
      If so, a PZN/OPCO bankruptcy filing would place all
      contracts at risk of either outright termination or
      renegotiation at more favorable terms to the government. JMHO

    • But, the actual damage was caused by the
      investment co.'s pressing them to pay off the loans(although
      the property values exceeded the loans by far and
      there was no problems with cash flow). To protect the
      assetts from being decimated by having to sell off
      properties at the worst time the Bill's (two tough real
      estate guy's who run CMM)did a BK and FU in one fell
      swoop. The small common shareholder went down the tubes,
      but so did the 2 Bill's...except that they are not
      (although not liked either)but they have the opportunity to
      get the CMM ship back on course(it's profitable)and
      will come out of BK in about May maybe at a $4
      $1.06....If we had the 2 Bill's at the helm of PZN I'd sleep
      better at night.Anyway ,if interested look at CMM
      board..some of the guy's posting here got caught as
      A better deal will come..DUMP THE BLACKSTONE DEAL!

    • I worked for Bruce Lunsford for a short time in
      1980 when he was Secretary of the KY Economic
      Development Cabinet. Like Doc, he is very bright (Attorney
      and CPA), ambitious and has huge, brass, balls. He
      got caught in a double whammy. He bought the nations'
      largest nursing home company- which was much bigger than
      Vencor, and was losing money. He got caught in a real
      squeeze when Medicare cut down on fees they would pay
      nursing homes. To escape that tradegy, he created Ventas,
      which was a real estate holding company that he planned
      to transfer the real estate into and get the Vencor
      nursing homes to pay Ventas a leasehold fee. The whole
      house of cards fell when Vencor couldn't pay Ventas, or
      their other creditors. Lunsford and his bes pal sold a
      good hunk of their stock right before the excrement
      hit the fan. I see the PZN/CCA situation a little
      different. Personality wise Lunsford and Crants were close.
      Both over-reached. Doc needed money for expansion and
      couldn't raise enough as a C Corp. He went the REIT
      route,which put him in deeper trouble, because he had to pay
      out all of his capital to we stockholders. Hindsight
      is 20/20, but why he (the analysts and we
      stockholders) didn't figure this out can only be explained by
      Doc's success in building CCA and investor confidence
      in his ability. The CA spec prisons were Doc's
      Achilles heel. He had to keep throwing off cash to a
      non-productive venture. Both companies probably are guilty of
      not being up-front with their stockholders. Both had
      "crony" boards that they controlled. I think CCA/PZN will
      go bankrupt, but that the new owners, who will buy
      the assets at a very deep discount, will make plenty
      of money. I probably will reinvest after the company
      is reorganized.

      • 2 Replies to olddaddygram
      • As a wannabe happy brigader, I am saddened to see
        your bankruptcy prediction. IMHO the remerger will
        pull PZN/CCA out of its death spiral. This is based on
        the value of the core business, improving occupancy
        from the USBOP, INS, USMS, and Wisconsin contracts,
        and the freeze on new spec projects. That said, there
        are probably two more surprizes, (again IMHO) that
        may force the stock price down even more--both of
        which should be disclosed in the remerger prospectus

        First, 1999 occupancy levels will likely appear flat
        (and less than 90%). Primarily because the new
        contracts just about equal the new beds coming on

        Second, the combined companies are just about out of cash
        (as suggested before by either Brendy or Buselli).
        This is because of the foolish strategy of trying to
        grow while paying out an amount in excess of earnings
        combined with below breakeven operational

        The best news is that Junior and Devlin are
        gone--with these two "geniuses" no longer getting paid to
        screw things up, the operational people should have the
        resources and time needed to return this company to its
        leading position in the industry.

        So, once again,
        RAUGAR is right--the price is going to hit $4 and may
        even go to $3 before recovery. But it will recover.
        Unfortunately, the Blackstone deal (or some other infusion of
        cash) is absolutely necessary to ensure survival. (Once
        again, IMHO.) Keep the faith!

      • Checking the price of their debt issue is a good
        way to see if BK is in the cards. I've seen stocks
        trading at $2-$4 when the bonds are 20 cents on the
        dollar(Iridium). Last I checked PZN's debt was not trading THAT
        badly. I'll try to check again, or if anyone else

        I'm curious on this recent 13-G filing if this is
        truly a new filing or an add on. If it is that means
        Dreman and "related" groups are up climbing up to 20% of
        this company. Certainly they would want to get control
        of things to stop the Fortress deal soon if that is
        their plan. No problem finding sellers it appears.

32.22+0.18(+0.56%)Jul 22 4:02 PMEDT