New Jail Operator In Financial Trouble?
Tuesday, July 27th 1999, 12:00 am
News On 6
The private company picked to run the new Tulsa County Jail is having troubles according to some investment experts. They're questioning the financial stability of Corrections Corporation of America. The News on Six has been investigating CCA's current financial situation and if this could affect the Tulsa jail operation.
After two delays, the new jail is supposed to start receiving inmates August 15th. Although county officials believe it could happen as soon as August first. Corrections Corporation of America or CCA, operates the new jail. They merged with a company called Prison Realty Trust at the beginning of the year. Prison Realty controls the finances, CCA controls the operations.
Recent data shows Prison Realty stocks have plummeted. "The stock came out about 200 months ago, hit an all-time high of about 44 and a half. It runs on the average between 18 to 20. Here recently it's dropped off to nine and three-quarters," says David Healey, broker with PaineWebber. Healey says the stocks have continued to drop since 1998. He says CCA facilities aren't housing enough inmates so the company isn't making as much money as expected. "Their bed count dropped from an occupancy from June of last year of 92 per cent to 80.4 per cent at the end of last year," Healey said.
Healey revealed Prison Realty had to issue a $100,000,000 bond issue last month. The company, basically took out a loan. Prison Realty's Chief Operating Officer Michael Devlin says it will be paid back over a seven-year period. He says the stocks have dropped significantly, but that's just the stock market. Devlin says they are experiencing a short-term financial erosion, but he is confident they will bounce back. He says it will not affect Tulsa's jail.
Tulsa county commissioner Bob Dick says at this point, he's not worried. "I don't think there's any alarm. The contract we have I think guarantees us the jail will be run in the event something disastrous should happen," Dick stated. But he admits he's keeping a close eye on the financial situation.
In the event CCA can't run the jail, the Tulsa county sheriff's office will step in and take over jail operations.