Because public safety is involved, the operating
business has no hope of winning contracts unless it is in
sound financial condition. Bankruptcy is not a viable
option. A large equity investment is necessary. The only
concerns should be whether the terms are fair and provide
a basis for the company to restructure its
operations and return to profitability.
shareholder vote provides some leverage. It's very difficult
to collect votes from retail shareholders. If a few
institutions threaten to abstain or vote against the current
deal then it will be unlikely to receive the necessary
majority (although rejection of this deal without another
deal lined up would leave the company and the stock in
worse shape than now). I would like to see
Blackstone is currently paying $350 million and then
offering existing shareholders $35 million of their paper.
I would like to see existing shareholders given the
right to buy up to $100 million of the Blackstone
paper. This would:
1) significantly reduce the
dilution (as long as you subscribe)
2) require very
little modification of the existing deal and therefore
not impede the company from addressing its operating
3) more closely align the interests of existing
shareholders with Blackstone.
negotiated for a $250 million investment. Keep them at that
level and let existing shareholders make up the
Would somebody explain what they mean when they
suggest that PZN might go bankrupt? Obviously, you can
not go bankrupt by missing a dividend. The only risk
that I am aware of is that losing REIT status (which
has not occurred yet) would result in taxes due.
Therefore, if REIT status can be retained, bankruptcy would
not be a risk - - correct? Therefore, the only issue
is whether PZN can pay 1999 dividends in the form of
securities. That would allow retention of REIT status,
eliminate the need to pay taxes, and allow the company to
go forward without new acquisitions on a positive
cash flow basis.
addressed many times on this message board and
also by PZN itself. The distributions necessary to
qualify for REIT status can be paid in cash or in
securities, though the securities cannot be common stock of
the issuer itself. Thus, PZN could not maintain REIT
status merely by splitting the already-woefully
low-priced common stock. However, PZN could easily issue
preferred stock of any sort so as to satisfy the REIT
As to bankruptcy, there is
the little matter of the $1 billion plus of bank debt
that PZN owes. Servicing the debt, and even paying it
back, should be a piece of cake, UNLESS there's
something more worse going on from an operational
standpoint than the company has disclosed.
Check out CMM-B. CMM is expected to come out of
BK in April. The $2.88 div. pref. B, trading at
$14.50, has over $4 in dividends arrears expected to be
paid in full under the current BK plan(the preferreds
are "unimpaired" thus keeping them out of the BK
vote, better to pay them).
the stock is still going down because the market
is afraid the Blackstone deal WON'T be
As someone posted earlier, Blackstone wasn't looking
for an 18% deal. They didn't have a gun to their
heads. And I can't believe that anyone has ever done
more due diligence on this company. They certainly
know more than we do about it, even after reading the
Attention all protection and public safety
operators and government entities. Shareholders of talented
builder but incompetent manager of private prisons seeks
new contracts. Of our 43 up and running
state-of-the-art facilities 9 are already leased to
private/government operators so only 34 facilities remain. HURRY
NOW! Company presently under seige by vulture equity
investment which threatens to destroy all present and future
value of common stock so no REASONABLE OFFER refused.
CALL NOW LET'S TALK P.S. Don't forget to bring your
bankers because our's will be there as we are now
conjoined at the hip.
I wasn't sure which Preferred RAUGAR was
referring to. The existing or the one to come. I agree with
your concerns on the current Preferred. It is not
presently paying nearly enough yield to entice me. While
the possibility of BR may be low, anyone who says
it's nil is kidding themselves. I wonder what the
bonds are doing.
One other thing, I believe that
PZN common has a ceiling more in line with 6.5-7.5.
It seems to me that an investor would either see
this ceiling (because of the convertibility option) or
none at all. I don't know someone can arrive at $10.
I think all along was to screw the common stock
holders. How can it be any other way when every word out
of your mouth is a lie. My only thought at the
moment is that doc goes down with the rest of us. His
own lies have finally done him in. End of story BK is
all around . Will put what I have left in STAC
tomorrow Zero debt good honest company.
PZN paid the dividends when it didn't have the
real income to afford them. It paid until it became
evident that it could no longer do so. By then, it was
too late to undo the damage done by paying the
The problem I see is that there
is no really reliable information available about
the real economic position of the
Everyone keeps writing about Doc like he is going to have
to pay his own legal expenses. The company will be
paying his expenses, under a standard indemnity
agreement. That means that the shareholders will pay his
Now, don't that shake the rag
off'n the bush?
Any ideas for recouping this loss? Don't know
whether to bail now and save what's left or hang on.
Surely Dreman is having the same thoughts. If we are
facing BK, then now is the time to get out. Shareholders
will be wiped out, mgmnt will get ownership in new
company and all will be forgotten. Look at Just for FEET.