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Corrections Corporation of America Message Board

  • justmyview justmyview Apr 24, 2000 5:35 PM Flag

    Insurance or No Insurance

    If this deal doesn't get done soon we are all in
    trouble. Obviously it will be much harder to convince
    people to invest more money into this if the price
    slides below $2. It's a confidence thing and it's hard
    to have confidence in a penny stk. Also many
    potential investors will not touch a penny stk. The further
    it drops the harder it will be to bring it back up.
    The absence of news will drop this stk to $2.50 by
    the end of next week. There is a point when PZN at
    $2.50 will no longer look like a bargin and that point
    is fast approaching.

    Also this company was
    facing a short-term crisis of cash flow. That has not
    gone away. Additionally, don't they need to pay BS the
    $22M soon. Cash is king and this compay doesn't have
    any.

    The deal has to happen soon. You can bet the
    creditors care about the price of the stk.

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    • I feel for the long term holder all this is
      critical and will work for their benefit too.

      I
      have some very large loses in this stock so it's hard
      for me too be too bullish, I'm trying to be
      realistic.

      The question I think is "where is the rent check
      going?" Is CCA finishing off their existing prisons? Or
      are the operating loses that bad they can not pay
      their rent check. If it's the later the recovery will
      be very long.

    • Guess it will be the singing pigs vs. the cash cows! lol

    • The Pref C is like a stock dividend (especially
      if you believe it is optimal to convert to common),
      and the rights are like a stock split combined with a
      negative dividend (shareholders pay cash to the
      company).

      That said, I think we would agree that this may still
      be a relatively good deal for common shareholders.
      As some here have argued, PZN may be a tremendous
      bargain right now. I am long, but not as confident as
      others. However, I am not long because I expect to make
      money simply by receiving Pref C and rights. My hope is
      that the $200mm infusion we will be sending in will be
      well-managed by PL and PZN will become a profitable
      business.

      I am a little concerned about the posts that
      describe how CCA can not pay PZN rent, and PZN is on the
      verge of insolvency, but once we combine these two
      losers we will magically have a cash cow. As I say, I am
      long. But I do worry that the "cash cow" part is not
      too well documented.

    • So true...""If this deal doesn't get done soon we
      are all in trouble.""

      From the 10-k.....what
      we have to look forward to if this deal
      collaspes:
      ""the Company's independent auditors have included
      an
      explanatory paragraph in its report to the Company's
      consolidated financial
      statements for the year ended
      December 31, 1999 that express substantial doubt
      as to
      the Company's ability to continue as a going concern.
      The existence of
      these explanatory paragraphs may
      have a material adverse effect ""

      and
      why?
      On CCAor OPCO
      ""the Company has acknowledged to
      the senior
      lenders under its bank credit facility
      that an event of default exists under the
      bank
      credit facility and, as such, the Company has been
      paying interest at the
      default rate thereunder since
      January 14, 2000. ""
      and
      ""In addition, CCA is
      in
      default under the CCA Note and has not made certain
      scheduled lease payments to
      the Company pursuant to the
      terms of the CCA Leases. ""

      And most
      frightening:
      "During 2000, CCA has paid $12.9 million of lease
      payments
      related to 1999 and no lease payments relating to 2000.
      "" THAT"S NO MONEY TO PZN!! THIS YEAR!!

      PZN
      will go out of business ASAP if this PL deal fails,
      the bankers are ready to slam the door. CCA is in
      serious beyond bankrupt, and when your only tenant is
      that bad, we all should be worried. IMO.

    • to the speculation about a buyout at 6 or 8? Oh,
      that was when the stock was southbound for 5. A
      "takeunder" at 5 would have cost what -- about $650 mil, plue
      assumption of debt. Wonder what the reason is that KKR and
      other LBO folks are not lining up to buy this pig, if
      the value is so compelling? They could renegotiate
      the terms of the credit faciltiy, hang out an "under
      new management (again)" sign, and do an IPO as a
      C-corp. Restored to financial health, the occupancy
      numbers could rebound based on new contracts and the
      bankers and class action lawsuits could be paid off. The
      possibilities are endless.

 
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