<PAGE> 1
EXHIBIT 99.1
Company Press Release
PRISON REALTY OBTAINS WAIVER AND AMENDMENT
UNDER CREDIT FACILITY
NASHVILLE, Tenn., June 12, 2000/PRNewswire/ - Prison Realty Trust, Inc.
(NYSE: PZN)("Prison Realty" or the "Company") announced today that it has
obtained a waiver of existing defaults under its $1.0 billion senior secured
credit facility with a syndicate of banks led by Lehman Commercial Paper Inc. as
Administrative Agent, and has made amendments to the credit agreement under the
facility so as to allow for continued borrowing under the facility and a
comprehensive restructuring of the Company.
THE WAIVER AND AMENDMENT
The Waiver and Amendment allows the Company to borrow up to $55.0
million under the credit facility which will be available to the Company at
various times during the 2000 calendar year to meet certain of its liquidity and
capital needs. Under the terms of the Waiver and Amendment, the interest rates
on the loans outstanding under the facility were increased by 50 basis points,
or 0.5%, while the maturities of the loans were unchanged. In connection with
obtaining the Waiver and Amendment, the Company paid the lenders an amendment
fee equal to 75 basis points, or 0.75%, of the facility. The complete text of
the Waiver and Amendment will be included as an exhibit to a Current Report on
Form 8-K to be filed by the Company with the U.S. Securities and Exchange
Commission via EDGAR.
The Waiver and Amendment requires the Company's completion of a
comprehensive restructuring, including:
- the merger of the Company with its primary tenant, Corrections
Corporation of America, or CCA, for non-cash consideration on or before
September 15, 2000;
- the Company's election to be taxed as a C corporation, rather than as a
REIT, for federal income tax purposes commencing with its 2000 taxable
year; and
- the selection of new senior management of the Company through the
appointment of a new chief executive officer and a new chief financial
officer.
The terms of the Waiver and Amendment also require the Company to: (i)
satisfy its remaining REIT distribution requirements with respect to its 1999
taxable year through the issuance of securities; (ii) defer the payment of fees
to CCA under the terms of certain existing agreements between the companies
until the completion of the Company's merger with CCA; and (iii) use its
commercially reasonable efforts to complete a common stock rights offering by
December 31, 2000. The Waiver and Amendment also requires to the Company to
engage a management consultant reasonably satisfactory to the Administrative
Agent. In this regard, the Company has engaged Zolfo Cooper, LLC, which has been
providing such consulting services to the Company since early May 2000.
<PAGE> 2
As the result of the Waiver and Amendment, additional financial
covenants were added under the facility to reflect the Company's operations
after the merger, rather than as its current status a REIT, assuming the merger
is completed. In addition, previously existing financial covenants have been
waived through June 30, 2000 and certain temporarily liquidity thresholds will
be monitored by the lenders prior to the Company's merger with CCA.
The Waiver and Amendment also permits the Company to complete certain
actions in connection with the restructuring and the raising of additional
capital, including:
- the deferral of a majority of the rents owed the Company by CCA under
the terms of the lease agreements between the companies until September
30, 2000; and
- the merger of the Company with the two private service companies for
non-cash consideration.
The Waiver and Amendment also permits the Company to make required interest
payments under the terms of the Company's 12% senior notes, due June 2006.
The Waiver and Amendment requires that the Company complete certain
transactions in order to prevent an event of default under the facility,
including: (i) the merger of the Company with CCA on or before September 15,
2000; (ii) the Company's filing of preliminary proxy materials with the
Commission on or before July 1, 2000 and the mailing of final proxy materials to
the Company's stockholders on or before August 1, 2000, each with respect to the
merger of the Company with CCA and the Company's operation as a C corporation
beginning with its 2000 taxable year; and (iii) the "securitization" of the
Company's Agecroft facility located in Salford, England on or before February
28, 2001 and providing proceeds to the Company of at least (pound)45.0 million.
The Waiver and Amendment also provides that, among other things, it shall be
an event of default under the terms of the credit facility if the Company:
(i) settles any of the shareholder litigation currently outstanding against the
Company for cash amounts not fully covered by insurance; or (ii) declares and
pays any dividends with respect to the Company's existing Series A Preferred
Stock until the Company raises at least $100.0 million in additional equity.
TRANSACTIONS WITH PACIFIC LIFE
On April 17, 2000, the Company announced a series of proposed
restructuring transactions led by Pacific Life Insurance Company ("Pacific
Life"), which includes, among other things, an equity investment in the Company
by Pacific Life and the Company's common shareholders through completion of a
$200.0 million common stock rights offering, backstopped 100% by Pacific Life.
The Waiver and Amendment is effective regardless of whether or not the
previously announced transactions between the Company and Pacific Life are
completed. It is a condition to the parties' obligations under the terms of the
Securities Purchase Agreement between the Company and Pacific Life that, among
other things, the Company renew its existing credit facility on terms that are
reasonably acceptable to Pacific Life. Accordingly, the Company expects to
discuss the terms of the Waiver and Amendment with Pacific Life to determine
whether the Waiver and Amendment is reasonably acceptable to Pacific Life and
satisfies the condition contained in the Securities Purchase
<PAGE> 3
Agreement. During the negotiations of the Waiver and Amendment, Pacific Life
indicated that the Waiver and Amendment should include an extension of the
maturities of the loans outstanding under the facility. The Waiver and Amendment
does not include such an extension. In the event Pacific Life determines that
the terms of the Waiver and Amendment are not acceptable to it and that the
condition is not satisfied, then the Company anticipates that it will proceed to
complete the merger with CCA as contemplated by the Waiver and Amendment,
subject to stockholder approval.
THE COMPANIES
The Company's business is the development and ownership of correctional
and detention facilities. Headquartered in Nashville, Tennessee, the Company
leases jails and prisons to both private and governmental managers. The Company
currently owns or is developing 50 correctional and detention facilities in 17
states, the District of Columbia and the United Kingdom.
The companies doing business as "Corrections Corporation of America"
provide detention and corrections services to governmental agencies. These
companies are the industry leader in private sector corrections with more than
72,000 beds in 77 facilities under contract or under development in the United
States, Puerto Rico, Australia and the United Kingdom. Their full range of
services includes design, construction, renovation and management of new or
existing jails and prisons, as well as long-distance inmate transportation
services.
This news release contains forward-looking statements within the
meaning of Section 27(a) of the Securities Act of 1933, as amended, and Section
21(e) of the Securities Exchange Act of 1934, as amended. Actual results could
differ materially from those set forth in the forward-looking statements.
Institutional Investor Contact: Alex Singal (615) 263-3005
Retail Investor Contact: Kerry Reitz (615) 263-0200
###
