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Sunday, 26 December 1999

Fortress, Blackstone, BofA to Recapitalize Prison Realty

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December 27, 1999

NASHVILLE, Tenn. – An investment team comprised of Fortress Investment Group LLC, Blackstone Group and Bank of America have agreed to invest up to $350 million in Prison Realty Trust Inc. (NYSE:PZN), effectively recapitalizing the struggling REIT.

Prison Realty will also merge with Corrections Corp. of America and give up its REIT status. It will also suspend its current dividend.

Prison Realty was spun off in 1997 from Corrections Corp. It owns prisons that are managed by Corrections Corp.

The Fortress, Blackstone, BofA team will buy $315 million of convertible preferred stock and warrants and can buy an additional $35 million in a merged company, which will operate as Corrections Corp. of America. They will own 31 percent to 39 percent of the company.

The preferred is convertible into common shares at $6.50 a share, while the warrants are exercisable at $7.50/share.

Existing shareholders of Prison Realty common would be offered the chance to invest up to $75 million alongside the investor group.

The merged company will also receive a $1.2 billion term loan and revolving credit facility from a group led by Credit Suisse First Boston and Lehman Brothers that will replace Prison Realty's existing $1 billion credit facility from Lehman Brothers.

As part of the recapitalization, outside shareholders of Corrections Corp. will be repaid their original investments, which equates to 40 percent of the per share value that the new investors are getting.

As part of the restructuring, Doctor R. Crants, chairman and chief executive of Prison Realty, would resign. He will be named vice chairman of the company and serve as advisor to the board of directors.

Thomas W. Beasley, formerly chairman of the board and one of the founders of the original company, will assume the post of interim chairman and chief executive. J. Michael Quinlan will remain as president and chief operating officer of Corrections Corp. and will also serve as interim president of Prison Realty, replacing D. Robert Crants, III, who also has resigned effective immediately.

Fortress and Blackstone will start a search for a new chief executive and chief financial officer of the combined company.

"This transaction is intended to position CCA once again as a growth company with tremendous prospects and re-establish transparency to shareholders regarding the fundamental strength of CCA's business. Our belief is that a greatly simplified and more efficient capital structure will allow the company to fund future growth internally and will assist the company in maximizing shareholder value," said Wesley R. Edens, chairman and chief executive of Fortress.

Merrill Lynch & Co. advised Corrections Corp. on the deal.


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“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

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Additional Info

  • Syndicate to Realpoint: No
  • Subject: Mergers & Acquisitions (M&A), Mortgages/Financing (MOR)
  • Company: BankBoston Corp., BNP Residential Properties Inc., Franchise Finance Corp. of America, Prudential Insurance
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Data Digest







Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44




cppichart FP



CMBS 2.0 Spreads


Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41





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