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Corrections Corporation of America Message Board

  • grunka grunka Sep 29, 2000 1:55 PM Flag

    Conversion

    Today is the 10th trading day prior to the first
    conversion period. Based on the closing price of the common
    these ten days, the average is under $1 so we should
    get 24.46 common shares for each Pref B, Correct?

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    • At no time in the past 10 trading days did PZN
      trade under one dollar. So how could the average be
      under $1. ? I show the following
      closing prices
      (based on Yahoo) for the past ten
      trading days: $
      1.9375, 1.9375, 1.8125, 1.8125, 1.7500, 1.1875, 1.1875,
      1.1250, 1.000, 1.3125 = 15.0625 total. divided by 10 =
      1.50625 = average price per share. 24.46 divided by
      1.50625 = 16.2395 shares for each Preferred B
      share
      converted . I don't know how PZN will handle the fractions.

      • 4 Replies to bensabia
      • Bensabia had the "conversion" price bang on back on Friday, if the closing prices noted in his post # 15472 are "official". If so. it looks like $1.50 is valid.
        Thanks ben, good call!

      • I was basing it on the adjusted closing cost, do you know for a fact that thats not the figure that will be used for the average, or will PZN use whatever figure that is to their advantage.

      • Ben, I believe you are correct. Therefore in the
        first conversion period a PZN.B shr will become
        16.239004149 shrs of common.

        100 shrs of PZN.B will
        become 1623.9 shrs of the common. Upon conversion,
        fractional shrs will be credited in cash, and the account
        should show 1623 shrs and .9x1.50625 ($1.36) in cash.
        That's my take, anyway.

        Question is, what will
        PZN trade at during the ten days preceeding the
        second conversion period? More than a $1.50 average?
        Those meaning to convert will have to decide the answer
        before 10/13.

      • I've been out of touch with the board since last
        week or so when I sold some PZN for tax loss
        purposes..can you give me your assessment as to what the
        general opinion is regarding the conversion and when is
        the window open ?
        Would appreciate, still have
        substantial position.

    • The first half of conversion period was pre-dividend. If PZN closes at $1.125 today I figure the conversion price is $1.4375 for the first period.

      • 1 Reply to flipper_58
      • It looks like today's close will be $1.3125. This
        should mean a conversion price of $1.50.

        However,
        just for fun, I checked Yahoo's historical quote data
        and found that for the period prior to the dividend
        there is an adjusted price listed which totals $4.4626
        for the first five days of the conversion period. If
        this price is used the conversion price becomes
        $1.0275.

        Note: the press release says the average close on the
        NYSE. It does not say anything about using an adjusted
        closing price. But, I for one am confused.

    • As a note of interest. If you buy one share of
      the preferred B today at $18.50 and you convert
      during the first conversion period to 24.46 shares of
      PZN common, will the 24.46 shares of common hold at
      $1.00 or sink to $ .75 = 18.5 / 24.46? If the common
      holds at $1.oo you can sell for a 32% profit.

 
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