News Articles
This site contains over 2,000 news articles, legal briefs and publications related to for-profit companies that provide correctional services. Most of the content under the "Articles" tab below is from our Prison Legal News site. PLN, a monthly print publication, has been reporting on criminal justice-related issues, including prison privatization, since 1990. If you are seeking pleadings or court rulings in lawsuits and other legal proceedings involving private prison companies, search under the "Legal Briefs" tab. For reports, audits and other publications related to the private prison industry, search using the "Publications" tab.
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CCA - Prison Realty Merger Approved
A merger between Corrections Corp. of America (CCA) and Prison Realty Trust was approved by shareholders of both companies on Dec. 1, and Dec. 3, 1998, respectively. CCA had spun-off Prison Realty Trust in July 1997, then announced merger plans last April [See: CCA Sells Self; Wackenhut Creates REIT," PLN , Vol. 9 No. 8].
The CCA-Prison Realty merger was opposed by an organized labor group that safeguards pension funds of member unions. The AFL-CIO's Office of Investment sent seven-page mailings to CCA shareholders urging them to vote against the proposed merger because it unfairly favored CCA management and two major institutional investors, and transfered some of CCA's most valuable assets to companies that would not benefit shareholders.
"We are reaching out to CCA's shareholders to put forth our critique of the deal and get some dialogue going," said AFL-CIO representative Beth Young.
CCA spokesperson Peggy Lawrence said the union's complaints were out of context and outdated. The AFL-CIO and affiliated labor unions held an estimated .5% of CCA's stock prior to the merger.
Three of the nation's largest pension funds also opposed the merger. The California Public Employees' Retirement System, the New York City Pension Fund System, and the New York State Common Retirement Fund announced they would vote against the merger because it wasn't in the best interest of CCA shareholders. [ Ed. Note: But it is in "the best interest" of state employee pension funds to invest in CCA stock? ] CCA offered to meet with the three pension funds but was rebuffed; the funds held a 1.77% stake in CCA's pre-merger stock.
Institutional Shareholder Services, a Washington, D.C.based investment advisory service, recommended that CCA shareholders vote against the merger but that Prison Realty investors vote for it.
CCA faces several individual shareholder suits which claim the merger favors corporate executives -- including CCA C.E.O. Doctor R. Crants, who would own an estimated 1.9 million shares in the combined companies.
According to a Prison Realty document filed with the Securities and Exchange Commission (SEC) on October 14, 1998, potential conflicts of interest exist between CCA and Prison Realty due to interlocking business and financial relationships among the two companies' directors and officers. Doctor R. Crants, Chairman and CEO of CCA, is also Chairman of Prison Realty; his son, D. Robert Crants III, is Prison Realty's President. Prison Realty's CEO, Michael Quinlan (former Director of the Federal Bureau of Prisons) is a former CCA corporate officer.
D. Robert Crants III, Prison Realty's Chief Operating Officer Michael W. Devin, CCA board member Lucius E. Burch III, and The Stephens Group are joint owners of DC Investment Partners, LLC. The Stephens Group is an affiliate of Stephens, Inc., CCA's financial advisor in connection with the merger.
According to the SEC filing, because of these and other relationships there exists the risk that [Prison Realty] will not achieve the same results in its dealings with CCA that it might achieve if such relationships did not exist."
The proposed merger required a majority vote by CCA investors and a 2/3 vote by shareholders in Prison Realty. Sixty-two percent of CCA's outstanding shares voted in favor of the merger; 11% opposed and 27% did not vote. An overwhelming 82% of Prison Realty's shares voted to approve the merger.
The $3 billion merger, which CCA spokesperson Peggy Lawrence described as a "watershed event," was effective as of January 1, 1999.
The outcome of the CCA-Prison Realty merger is the Maryland-based Prison Realty Corp., which trades on the NYSE under the heading "PrisonR" (ticker symbol PZN). Prison Realty incorporates three subsidiary companies -- Correctional Management Services, Prison Management Services and Juvenile & Jail Facility Management Services -- all doing business under the CCA name (d.b.a. CCA). Prison Realty Corp.'s stock has remained fairly stable since the merger at around $20-$21 a share, which was CCA's approximate pre-merger stock value.
Business Week, The Jackson Sun (TN), New York Times ,The Tennessean, Prison Privatisation Report International ,The Knoxville News-Sen- tinel
The CCA-Prison Realty merger was opposed by an organized labor group that safeguards pension funds of member unions. The AFL-CIO's Office of Investment sent seven-page mailings to CCA shareholders urging them to vote against the proposed merger because it unfairly favored CCA management and two major institutional investors, and transfered some of CCA's most valuable assets to companies that would not benefit shareholders.
"We are reaching out to CCA's shareholders to put forth our critique of the deal and get some dialogue going," said AFL-CIO representative Beth Young.
CCA spokesperson Peggy Lawrence said the union's complaints were out of context and outdated. The AFL-CIO and affiliated labor unions held an estimated .5% of CCA's stock prior to the merger.
Three of the nation's largest pension funds also opposed the merger. The California Public Employees' Retirement System, the New York City Pension Fund System, and the New York State Common Retirement Fund announced they would vote against the merger because it wasn't in the best interest of CCA shareholders. [ Ed. Note: But it is in "the best interest" of state employee pension funds to invest in CCA stock? ] CCA offered to meet with the three pension funds but was rebuffed; the funds held a 1.77% stake in CCA's pre-merger stock.
Institutional Shareholder Services, a Washington, D.C.based investment advisory service, recommended that CCA shareholders vote against the merger but that Prison Realty investors vote for it.
CCA faces several individual shareholder suits which claim the merger favors corporate executives -- including CCA C.E.O. Doctor R. Crants, who would own an estimated 1.9 million shares in the combined companies.
According to a Prison Realty document filed with the Securities and Exchange Commission (SEC) on October 14, 1998, potential conflicts of interest exist between CCA and Prison Realty due to interlocking business and financial relationships among the two companies' directors and officers. Doctor R. Crants, Chairman and CEO of CCA, is also Chairman of Prison Realty; his son, D. Robert Crants III, is Prison Realty's President. Prison Realty's CEO, Michael Quinlan (former Director of the Federal Bureau of Prisons) is a former CCA corporate officer.
D. Robert Crants III, Prison Realty's Chief Operating Officer Michael W. Devin, CCA board member Lucius E. Burch III, and The Stephens Group are joint owners of DC Investment Partners, LLC. The Stephens Group is an affiliate of Stephens, Inc., CCA's financial advisor in connection with the merger.
According to the SEC filing, because of these and other relationships there exists the risk that [Prison Realty] will not achieve the same results in its dealings with CCA that it might achieve if such relationships did not exist."
The proposed merger required a majority vote by CCA investors and a 2/3 vote by shareholders in Prison Realty. Sixty-two percent of CCA's outstanding shares voted in favor of the merger; 11% opposed and 27% did not vote. An overwhelming 82% of Prison Realty's shares voted to approve the merger.
The $3 billion merger, which CCA spokesperson Peggy Lawrence described as a "watershed event," was effective as of January 1, 1999.
The outcome of the CCA-Prison Realty merger is the Maryland-based Prison Realty Corp., which trades on the NYSE under the heading "PrisonR" (ticker symbol PZN). Prison Realty incorporates three subsidiary companies -- Correctional Management Services, Prison Management Services and Juvenile & Jail Facility Management Services -- all doing business under the CCA name (d.b.a. CCA). Prison Realty Corp.'s stock has remained fairly stable since the merger at around $20-$21 a share, which was CCA's approximate pre-merger stock value.
Business Week, The Jackson Sun (TN), New York Times ,The Tennessean, Prison Privatisation Report International ,The Knoxville News-Sen- tinel
