The GEO Group Receives Required Consents for Transactions to Address Its Debt Maturities and Strengthen Its Capital Structure
17 Agosto 2022 - 07:00AM
Business Wire
The GEO Group, Inc. (NYSE: GEO) (“GEO” or the “Company”)
announced today that it successfully received the required
participation and/or consents of its secured and unsecured
creditors to close the previously announced transactions (the
“Transactions”) to comprehensively address the substantial majority
of GEO’s outstanding debt previously scheduled to mature in 2023,
2024 and 2026. GEO expects the closing of the Transactions to occur
on Friday, August 19, 2022, subject to customary closing
conditions.
Whereas previously, GEO would have had to address approximately
$2.0 billion in outstanding net debt maturities over the next four
years, the Transactions will stagger the maturities of GEO’s
outstanding debt further into the future. Based on final
commitments and participation levels, as further discussed below,
GEO’s revised gross debt maturities will be approximately $125
million in 2023; approximately $165 million in 2024; approximately
$341 million in 2026; approximately $1.1 billion in 2027; and
approximately $526 million in 2028.
Following the closing of the Transactions, GEO will have
approximately $200 million in domestic unrestricted cash and cash
equivalents and total liquidity of approximately $375 million. With
its available liquidity, the expected future proceeds from the sale
of certain non-core assets, and its current free cash flow run
rate, GEO expects to be able to fully repay the outstanding debt
amounts that will be due in 2023 and 2024, after giving effect to
the Transactions, prior to their stated maturities.
Assuming consistent financial performance across its business
units, over the next two years, GEO expects to be able to reduce
net recourse debt by $200–250 million annually. Based on this
level of debt reduction, GEO’s goal would be to decrease net
leverage to below 3.5 times Adjusted EBITDA by the end of 2023 and
to below 3 times Adjusted EBITDA by the end of 2024.
George C. Zoley, Executive Chairman of GEO, said, “We are very
pleased to achieve the participation and/or consent levels required
to successfully close the comprehensive Transactions we previously
announced to address the substantial majority of our outstanding
debt maturities. Importantly, the Transactions significantly reduce
our total recourse debt due in 2023 and 2024 and stagger our debt
maturities over a longer period of time.
We believe that these Transactions place GEO in a materially
stronger financial position, and we look forward to using most of
our free cash flow to continue to significantly deleverage our
balance sheet for the foreseeable future. We remain optimistic that
the successful completion of these Transactions, along with our
continued focus on debt reduction, will have the potential to
unlock additional equity value for our shareholders.”
As of 5:00 p.m., New York City time, on August 16, 2022, which
marked the expiration of the exchange offers and consent
solicitations under the Transactions, GEO received all required
participation and/or consents from its secured and unsecured
creditors, including holders of approximately 71% of the
outstanding principal amount of GEO’s Senior Notes due 2023;
holders of approximately 90% of the outstanding principal amount of
GEO’s Senior Notes due 2024; holders of approximately 68% of the
outstanding principal amount of GEO’s Senior Notes due 2026; and
term lenders collectively holding approximately 87% of the
aggregate principal amount of the term loans outstanding under
GEO’s credit agreement dated March 23, 2017, as amended. GEO also
received the required minimum participation from its revolving
credit facility lenders.
For additional information on the mechanics of the Transactions,
please refer to the Registration Statement, including the
prospectus forming part thereto, GEO filed with the SEC on July 19,
2022, as amended on August 15, 2022 and declared effective by the
Securities and Exchange Commission on August 16, 2022, relating to
the exchange offers and consent solicitations for certain of its
outstanding debt securities.
The exchange offers and consent solicitations described in the
Registration Statement were made only by and pursuant to the terms
and subject to the conditions set forth in the prospectus, and the
information in this news release is qualified by reference to such
prospectus and the Registration Statement. This news release is for
informational purposes only and does not constitute an offer to
purchase or a solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any state or jurisdiction
in which such offer or solicitation or sale would be unlawful.
About The GEO Group
The GEO Group, Inc. (NYSE: GEO) is a leading diversified
government service provider, specializing in design, financing,
development, and support services for secure facilities, processing
centers, and community reentry centers in the United States,
Australia, South Africa, and the United Kingdom. GEO’s diversified
services include enhanced in-custody rehabilitation and
post-release support through the award-winning GEO Continuum of
Care®, secure transportation, electronic monitoring,
community-based programs, and correctional health and mental health
care. GEO’s worldwide operations include the ownership and/or
delivery of support services for 102 facilities totaling
approximately 82,000 beds, including idle facilities and projects
under development, with a workforce of up to approximately 18,000
employees.
Use of forward-looking statements
This news release may contain “forward-looking statements”
within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and the U.S. Private Securities Litigation Reform
Act of 1995. Readers are cautioned not to place undue reliance on
these forward-looking statements and any such forward-looking
statements are qualified in their entirety by reference to the
following cautionary statements. All forward-looking statements
speak only as of the date of this news release and are based on
current expectations and involve a number of assumptions, risks and
uncertainties that could cause the actual results to differ
materially from such forward-looking statements, including our
ability to successfully consummate the Transactions on the
anticipated timeline or at all, our ability to repay debt due in
2023 and 2024, our ability to reduce net recourse debt by $200
million to $250 million annually over the next two years, our
ability to decrease net leverage at the anticipated rate over the
next two years, and our ability to successfully close on the
expected sale of certain non-core assets on the anticipated
timeline or at all. Readers are strongly encouraged to read the
full cautionary statements contained in GEO’s filings with the SEC,
including the risk factors set forth in the Registration Statement
on Form S-4, as amended, including a prospectus and consent
solicitation statement forming a part thereof, the Company has
filed with the SEC. GEO disclaims any obligation to update or
revise any forward-looking statements.
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Pablo E. Paez 1-866-301-4436 Executive Vice President, Corporate
Relations
Geo (NYSE:GEO)
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