NEW YORK, Jan. 29 /PRNewswire/ -- On January 26, 2009, the Ravenswood Investment Company, L.P. and Ravenswood Investments III, L.P. (together, the "Ravenswood Companies") filed a direct, derivative and class action lawsuit against Avalon Correctional Services, Inc. (Pink Sheets: CITY) and Donald E. Smith, Avalon's founder, CEO, chairman, and sole director. In the suit, the Ravenswood Companies alleged breaches of fiduciary duty against Smith in connection with causing Avalon to make sales of its preferred stock to insiders, repurchase Avalon's shares and pledge such repurchased shares to a trust as collateral for a Supplement Executive Retirement Plan ("SERP"), make excessive cash contributions to the SERP, make excessive cash contributions for a separate retirement plan for the benefit of Smith, lend cash to insiders to purchase common and preferred stock of Avalon, lease transportation equipment from an entity owned by Smith and make payments to such entity at above-market rates, and extend for a term of 15 years the exercise period of 750,000 Common Stock Purchase Warrants granted by Avalon to Smith. In addition, the lawsuit alleges oppression of minority shareholders by Smith and alleged unjust enrichment of Smith, both in connection with the foregoing actions, and made a demand for books and records. Robert E. Robotti, Managing Member of Ravenswood Management Company, LLC, the general partner of the Ravenswood Companies said, "We are following with interest the recent demand for inspection made by Avalon, as a stockholder of The Providence Service Corporation (NASDAQ:PRSC), under Section 220 of the Delaware General Corporation Law. Prior to the lawsuit noted herein, we had made a demand to inspect books and records upon Avalon, and despite our demand, Avalon refused and continues to refuse to produce any books and records." If you are interested in obtaining a copy of the Complaint in the above-described lawsuit, please feel free to contact William C. Rand, Esq. of the Law Office of William Coudert Rand at (212) 286-1425 or Matthew J. Day, Esq. of the Law Office of Matthew J. Day at (212) 673-0484. Contact: Ravenswood Management Company, LLC Robert E. Robotti (212) 986-4800 DATASOURCE: Ravenswood Management Company CONTACT: Robert E. Robotti of Ravenswood Management Company, LLC, +1-212-986-4800

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