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EXHIBIT 99.1
Contact: Alex Singal (615) 263-3005
PRISON REALTY TRUST ENTERS INTO MEMORANDUM OF UNDERSTANDING
WITH RESPECT TO OUTSTANDING STOCKHOLDER LITIGATION
NASHVILLE, Tenn. - (August 24, 2000) - Prison Realty Trust, Inc. (NYSE:
PZN) announced today that it has entered into a memorandum of understanding
regarding the settlement of all outstanding stockholder litigation against
Prison Realty and certain of its existing and former directors and executive
officers. The memorandum of understanding, which is subject to the execution of
a definitive stipulation of settlement by the parties, subsequent court approval
and other customary conditions, provides for the "global" settlement of a series
of purported class action and derivative lawsuits brought against Prison Realty
by current and former stockholders of the company and its predecessors, the old
Corrections Corporation of America and CCA Prison Realty Trust. These lawsuits
were brought as the result of, among other things, agreements entered into by
Prison Realty and its primary tenant, Corrections Corporation of America
("CCA"), in May 1999 to increase payments made by Prison Realty to CCA under the
terms of certain agreements and previously announced transactions relating to
the restructuring of Prison Realty and CCA led by the Fortress/Blackstone
investment group and Pacific Life Insurance Company.
"We are very pleased with the outcome of the negotiations with the
plaintiffs in this matter," said William F. Andrews, chairman of the board of
Prison Realty. "We believe the proposed settlement is in the best interest of
Prison Realty and its stockholders, as it frees Prison Realty from the burden of
significant litigation and allows the company to refocus its attention on its
business and restoring its credibility. Additionally, any significant judgment
against the company resulting from this litigation or a settlement for cash to
be paid by the company would have resulted in a default under the terms of our
credit facility."
The memorandum of understanding provides that Prison Realty will pay or
issue the plaintiffs:
- approximately $48 million in cash payable solely from the
proceeds under Prison Realty's and CCA's insurance policies;
and
- approximately $72.4 million in shares of Prison Realty common
stock (or 16,550,000 shares at an agreed value of $4.375 per
share).
The shares of common stock to be issued by Prison Realty in accordance
with the agreement will be subject to a stock price guarantee of $4.375 per
share, which will require Prison Realty to pay or issue, at its option, cash or
additional shares of common stock to the plaintiffs if the trading price of
Prison Realty common stock does not reach $4.375 per share for a specified
number of trading days during the period from the completion of the settlement
through August 31, 2001. In addition, shares issued in the settlement are
subject to certain anti-dilution adjustments if Prison Realty undertakes certain
transactions (generally, raising equity capital in excess of $110.0 million at
less than the stock price guarantee) during the period from August 31, 2001
through December 31, 2001.
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In addition to the payments of amounts specified above, Prison Realty
and the plaintiffs have agreed to certain other matters in connection with the
memorandum of understanding, including:
- restrictions on the form and amount of payments that may be
made by Prison Realty to certain affiliates of Prison Realty
and CCA and certain third parties in connection with the
proposed restructuring of the companies;
- restrictions on Prison Realty's ability to reprice stock
options previously issued to directors or executive officers
of the company for a period of 24 months; and
- the requirement that each committee of the Prison Realty board
of directors consist of a majority of directors which were not
directors of Prison Realty or its affiliates as of December 1,
1999.
Prison Realty expects to file a Current Report on Form 8-K with the
U.S. Securities and Exchange Commission with respect to the settlement of the
stockholder litigation which will include the full text of the memorandum of
understanding among the parties.
ABOUT THE COMPANIES
Prison Realty's business is the development and ownership of
correctional and detention facilities. Headquartered in Nashville, Tennessee,
Prison Realty provides financing, design, construction and renovation of new and
existing jails and prisons that it leases to both private and governmental
managers. Prison Realty currently owns or is in the process of developing 50
correctional and detention facilities in 17 states, the District of Columbia,
and the United Kingdom.
The companies operating under the "Corrections Corporation of America"
name provide detention and corrections services to governmental agencies. The
companies are the industry leader in private sector corrections with
approximately 70,000 beds in 77 facilities under contract or under development
in the United States, Puerto Rico, Australia, and the United Kingdom. The
companies' 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.
Prison Realty has previously announced a proposed restructuring,
pursuant to which, among other things, Prison Realty will merge with CCA and
elect to be taxed as a subchapter C corporation commencing with its 2000 taxable
year. Prison Realty is seeking stockholder approval of the restructuring at a
Special Meeting scheduled for September 12, 2000. Pending stockholder approval,
the companies intend to complete the restructuring on or before September 15,
2000. Prison Realty has filed definitive proxy materials with respect to the
restructuring with the U.S. Securities and Exchange Commission and has commenced
delivery of such materials to its stockholders. Stockholders are urged to read
these materials carefully as they include important information with respect to
the companies and the proposed restructuring.
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FORWARD-LOOKING STATEMENTS
This press release contains statements that are forward-looking
statements as defined within the Private Securities Litigation Reform Act of
1995. These include statements regarding changes related to Prison Realty's
operation so as to be taxed as a subchapter C corporation rather than as a REIT
commencing with its 2000 taxable year, merger plans between Prison Realty and
CCA, and the integration of Prison Realty's and CCA's operations and businesses.
These forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from the statements made. Other
factors that could cause operating and financial results to differ are described
in Prison Realty's filings with the U.S. Securities and Exchange Commission.
Other risks may be detailed from time to time in reports to be filed with the
Commission. Prison Realty does not undertake any obligation to publicly release
the result of any revisions to forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
