The GEO Group, Inc. Announces Closing of Acquisition of Correctional Services Corporation; Divests Juvenile Services Division
07 Novembro 2005 - 12:16PM
PR Newswire (US)
BOCA RATON, Fla., Nov. 7 /PRNewswire-FirstCall/ -- The GEO Group,
Inc. (NYSE:GGI) ("GEO"), a world leader in the delivery of
correctional and mental health services, announced today the
successful completion of its previously announced acquisition of
Sarasota-based Correctional Services Corporation (NASDAQ:CSCQ)
("CSC"), a leading developer and manager of privatized correctional
and detention facilities, for approximately $62 million, or $6.00
per common share. GEO also assumed $124 million of CSC non-recourse
debt. GEO's acquisition of CSC will add 16 adult male facilities
located in six states, totaling approximately 8,000 beds, to GEO's
operations, representing local, state and federal clients,
including the Bureau of Immigration and Customs Enforcement and the
United States Marshals Service. Post-closing of the CSC
acquisition, GEO will have contracts and awards to manage 58
facilities with a total design capacity of approximately 48,000
beds, increasing GEO's correctional bed market share from 22
percent to 28 percent. (Logo:
http://www.newscom.com/cgi-bin/prnh/20031201/FLM015LOGO )
Acquisition Financing GEO financed the acquisition of CSC through
the use of term loan borrowings under its amended senior secured
credit facility, consisting of a $75 million, 6-year term loan
bearing interest at LIBOR plus 2.00%, and a $100 million, 5-year
revolving credit facility bearing interest at LIBOR plus 2.00%. The
senior secured credit facility was underwritten by BNP Paribas.
Divestiture of CSC's Juvenile Services Division In addition, GEO
announced today the closing of the previously announced sale of
CSC's juvenile services business to James F. Slattery, the former
Chief Executive Officer of CSC, for $3.75 million. The transaction
was structured as a sale of the stock of CSC's youth services
subsidiary, Youth Service International, Inc. ("YSI"), to a newly
formed company owned by Mr. Slattery (the "Buyer"). Under the terms
of the transaction, the Buyer will be responsible for substantially
all of the pre- and post-closing liabilities related to CSC's
juvenile business. In addition, GEO retained ownership of a 26-acre
property in Newport News, Virginia, which previously housed one of
YSI's former juvenile facilities. Update on Alexander Case On
October 21, 2005, CSC announced that along with its liability
insurers, CSC entered into a comprehensive agreement to settle all
claims and lawsuits that had arisen out of the death of Bryan Dale
Alexander (the "Settlement Agreement"). The settlement was
contingent upon, and subject to, the closing of the acquisition of
CSC by GEO. The Settlement Agreement encompasses and resolves all
of the claims and lawsuits that have been or could have been
asserted against CSC, Knyvett Reyes, Tarrant County, Texas and
certain of the judges of Tarrant County, Texas by the estate and
parents of Mr. Alexander, as well as the insurance coverage dispute
between CSC and its liability insurers, Northland Insurance Company
and National Union Fire Insurance Company of Pittsburgh,
Pennsylvania, pertaining to such claims. The Settlement Agreement
also resolves a pending claim for indemnification that had been
asserted against CSC by certain of the judges who had been named as
defendants in the lawsuit brought against them by Mr. Alexander's
estate and parents. The monetary terms of the Settlement Agreement
are confidential; however, pursuant to the terms of the Settlement
Agreement, upon closing of the acquisition of CSC by GEO, CSC is
obligated to contribute approximately $2.7 million to the
settlement. George C. Zoley, Chairman and Chief Executive Officer
of GEO, said, "We are very pleased to have successfully completed
our acquisition of Correctional Services Corporation as well as the
sale of CSC's juvenile services division. These two simultaneous
transactions will allow GEO to focus on integrating CSC's adult
operations into our existing regional operating structure on a
cost-efficient basis. We believe that this acquisition is an
excellent strategic fit for our company, one that will have a
positive impact on our financial performance as well as broaden our
existing client base. We expect to fully integrate CSC's operations
by year-end 2005." Financial and Legal Advisors Lehman Brothers
acted as GEO's financial advisor on the acquisition of CSC and
provided the GEO board of directors with a fairness opinion.
Akerman Senterfitt served as GEO's legal advisor. Capitalink acted
as GEO's financial advisor on the sale of CSC's juvenile services
division and provided a fairness opinion to the GEO board of
directors. About The GEO Group, Inc. The GEO Group, Inc. ("GEO") is
a world leader in the delivery of correctional and detention
management, health and mental health, and other diversified
services to federal, state, and local government agencies around
the globe. GEO offers a turnkey approach that includes design,
construction, financing, and operations. GEO represents government
clients in the United States, Australia, South Africa, and Canada
with contracts and awards to manage 58 facilities with a total
design capacity of approximately 48,000 beds. Forward-Looking
Statements This press release contains forward-looking statements
regarding future events and future performance of the Company that
involve risks and uncertainties that could materially affect actual
results, including statements regarding estimated earnings,
revenues and costs and our ability to maintain growth and
strengthen contract relationships. Factors that could cause actual
results to vary from current expectations and forward-looking
statements contained in this press release include, but are not
limited to: (1) GEO's ability to successfully pursue further growth
and continue to enhance shareholder value; (2) GEO's ability to
access the capital markets in the future on satisfactory terms or
at all; (3) risks associated with GEO's ability to control
operating costs associated with contract start-ups; (4) GEO's
ability to timely open facilities as planned, profitably manage
such facilities and successfully integrate such facilities into
GEO's operations without substantial costs; (5) GEO's ability to
win management contracts for which it has submitted proposals and
to retain existing management contracts; (6) GEO's ability to
obtain future financing on acceptable terms; (7) GEO's ability to
sustain company-wide occupancy rates at its facilities; and (8)
other factors contained in GEO's Securities and Exchange Commission
filings, including the forms 10-K, 10-Q and 8-K reports.
http://www.newscom.com/cgi-bin/prnh/20031201/FLM015LOGO
http://photoarchive.ap.org/ DATASOURCE: The GEO Group, Inc.
CONTACT: Pablo E. Paez, Director, Corporate Relations, The GEO
Group, +1-866-301-4436 Web site: http://www.thegeogroupinc.com/
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