The GEO Group, Inc. (NYSE:GEO) (“GEO” or the “Company”)
today announced that it has commenced offers to exchange (the
“Exchange Offers”) any and all of its outstanding (i) 5.125% Senior
Notes due 2023 (the “2023 Notes”) and (ii) 5.875% Senior Notes due
2024 (the “2024 Notes” and, collectively with the 2023 Notes, the
“Old Notes”) for newly issued 10.500% Senior Second Lien Secured
Notes maturing on June 30, 2028 (the “New Notes”) and, if elected,
cash, upon the terms and subject to the conditions set forth in the
Prospectus, as defined below. In connection with the Exchange
Offers, GEO is also soliciting consents to amend the indentures
governing the Old Notes (the “Consent Solicitations”).
The following table sets forth the consideration to be offered
to holders of each series of Old Notes in the Exchange Offers and
the Consent Solicitations:
Title of Old
Notes to be
Tendered
CUSIP
Number
Outstanding Principal
Amount
Exchange Consideration
Tender of Old Notes and
Delivery of Consent (per $1,000 of Old Notes
Tendered)(1)(2)(3)
Delivery of
Consent Only(4)
5.125% Senior Notes due 2023
36159RAG8
$259,275,000
At the election of the
holder:
$300.00 principal amount of New
Notes and $700.00 of cash
OR
$1,050.00 principal amount of New
Notes
(the “2023 Notes-Only
Consideration”)
$1.00 of cash per $1,000 of 2023
Notes represented by such Consent (the “2023 Notes Consent
Fee”)
5.875% Senior Notes due 2024
36162JAA4
$225,293,000
At the election of the
holder:
$750.00 principal amount of New
Notes and $250.00 of cash
OR
$1,030.00 principal amount of New
Notes
(the “2024 Notes-Only
Consideration”)
N/A (Holders of the 2024 Notes
may only tender their Consent by validly tendering (and not validly
withdrawing) their 2024 Notes)
(1)
Exchange Consideration per $1,000
principal amount of Old Notes validly tendered (and not validly
withdrawn) prior to the Expiration Time.
(2)
Excludes accrued and unpaid interest,
which will be paid in addition to the Exchange Consideration.
(3)
Maximum principal amount of New Notes that
could be issued is $272,238,000 for the 2023 Notes and $232,051,000
for the 2024 Notes assuming full participation in the Exchange
Offers and that all holders elect the 2023 Notes-Only Consideration
and 2024 Notes-Only Consideration, respectively.
(4)
Holders of the 2023 Notes may elect to
either (i) tender their 2023 Notes and related Consent (as defined
below) or (ii) only deliver their Consent (the “2023 Notes
Consent”). Holders of the 2024 Notes may only tender their 2024
Notes with the related Consent.
The Exchange Offers and Consent Solicitations will expire at
5:00 p.m., New York City time, on August 16, 2022, unless extended
or earlier terminated (as such time and date may be extended, the
“Expiration Time”). Holders who tender their Old Notes or deliver
2023 Notes Consents, as applicable, at or prior to the Expiration
Time will be eligible to receive, for each $1,000 principal amount
of Old Notes validly tendered (and not validly withdrawn) or for
each $1,000 principal amount of 2023 Notes with respect to which
2023 Notes Consents are validly delivered (and not validly
revoked), the exchange or consent consideration (the “Exchange
Consideration”) listed in the above table. The New Notes will be
issuable in denominations of $2,000 or any integral multiple of
$1,000 in excess thereof. In addition to the Exchange
Consideration, payment of accrued and unpaid interest, if any, on
the Old Notes accepted for exchange will be made in cash promptly
after the Expiration Time; provided that holders of the 2023 Notes
that validly deliver only their 2023 Notes Consent will receive
interest on their 2023 Notes on the regularly scheduled interest
payment date set forth in the 2023 Notes.
Tenders of Old Notes may be withdrawn and Consents may be
revoked at any time at or prior to 5:00 p.m., New York City time,
on August 16, 2022, but not thereafter, subject to limited
exceptions and except as otherwise required by applicable law or
the Support Agreement (as defined below), unless extended (as such
time and date may be extended, the “Withdrawal Deadline”).
In conjunction with the Exchange Offers, the Company is
soliciting consents from holders of each series of Old Notes
(“Consents”) to certain proposed amendments to each indenture
governing the Old Notes (the “Old Notes Indentures”) to, among
other things, modify certain covenants and other provisions of the
indentures governing the Old Notes necessary or advisable to effect
the Exchange Offers and certain related refinancing transactions
described in this news release (the “Proposed Amendments”). Holders
of Old Notes that tender such Old Notes will be deemed to have
given Consent to the Proposed Amendments with respect to the Old
Notes. Holders of 2023 Notes may elect to either (i) tender their
2023 Notes and deliver the related Consent or (ii) deliver only
their Consent. Holders of 2024 Notes may elect to tender their 2024
Notes together with delivery of the related Consent. Holders of Old
Notes may not tender their Old Notes without delivering a Consent
with respect to such Old Notes tendered, and holders of 2024 Notes
may not deliver a Consent with respect to the 2024 Notes without
tendering the related 2024 Notes. To adopt the Proposed Amendments
related to a series of Old Notes, the Company must receive Consents
from holders representing a majority of the outstanding principal
amount of such series of Old Notes (the “Old Notes Requisite
Consents”). If the Old Notes Requisite Consents are delivered with
respect to any series of Old Notes, a supplemental indenture to the
respective indenture, giving effect to the Proposed Amendments with
respect to the applicable Old Notes, will be executed promptly
following the receipt of the Old Notes Requisite Consents, but in
no event prior to the Withdrawal Deadline.
The New Notes and the related guarantees will be secured on a
second-priority basis by substantially all of the assets of the
Company and certain subsidiaries (the “Collateral”) (subject to
certain permitted liens and the security documents) and will be
secured on a junior basis to first lien secured obligations, to the
extent of such Collateral. The New Notes will be effectively senior
to all existing and future unsecured indebtedness of the Company
and the Guarantors to the extent of the value of the Collateral,
including any Old Notes not tendered in the Exchange Offers and all
2026 Notes (as defined herein) that are not exchanged in the
Private Exchange (as defined herein).
The description above includes only a summary of certain key
terms of the Exchange Offers, Consent Solicitations and the New
Notes. A Registration Statement on Form S-4, including a prospectus
and consent solicitation statement forming a part thereof (the
“Prospectus”), which is subject to change, relating to the issuance
of the New Notes has been filed with the Securities and Exchange
Commission (the “SEC”) (the “Registration Statement”), but has not
yet become effective. The New Notes may not be sold nor may offers
to buy be accepted prior to the time the Registration Statement
becomes effective. If and when issued, the New Notes will be
registered under the Securities Act of 1933, as amended.
Copies of the Prospectus pursuant to which the Exchange Offers
and Consent Solicitations are being made may be obtained from D.F.
King & Co., Inc., the information agent and exchange agent for
the Exchange Offers and Consent Solicitations. Requests for
documentation and questions regarding procedures for tendering the
Old Notes can be directed to D.F. King & Co., Inc. at (800)
290-6428 (for information U.S. Toll-free), (212) 269-5550
(information for brokers) or geo@dfking.com (email).
On July 18, 2022, GEO entered into a transaction support
agreement (the “Support Agreement”) with certain lenders under
GEO’s Existing Credit Agreement (as defined below), certain holders
of the Company’s 2023 Notes and 2024 Notes (the “2023 Notes and
2024 Notes Supporting Holders”), and certain holders of the
Company’s 6.00% Senior Notes due 2026 (the “2026 Notes”). Pursuant
to the Support Agreement, holders of approximately 41% of the
outstanding principal amount of 2023 Notes and holders of
approximately 65% of the outstanding principal amount of the 2024
Notes have agreed, subject to certain conditions, to provide their
Consents to the Proposed Amendments and, subject to certain
exceptions, tender their notes in the Exchange Offers.
In addition, pursuant to the Support Agreement, GEO entered into
an agreement with holders (the “2026 Notes Supporting Holders”) of
approximately 68% of the outstanding principal amount of our 2026
Notes to exchange (the “Private Exchange”) approximately $239.1
million aggregate principal amount of 2026 Notes for approximately
$239.1 million aggregate principal amount of the Company’s newly
issued 9.500% Senior Second Lien Secured Notes due 2028 (the “2028
Private Exchange Notes”). The 2026 Notes Supporting Holders have
also agreed to deliver their Consents (the “2026 Notes Requisite
Consents”) with respect to a series of amendments (the “2026
Indenture Proposed Amendments”) to the indenture governing the 2026
Notes that will be substantially similar to the Proposed
Amendments.
The Support Agreement also memorializes the Company’s agreement
with revolving credit and term lenders (the “Credit Agreement
Supporting Holders”) collectively holding approximately 74% of the
aggregate principal amount of the term loan and revolving credit
commitments outstanding under the existing credit agreement dated
March 23, 2017, as amended (the “Existing Credit Agreement”) to
exchange (the “Credit Agreement Exchange”) the Credit Agreement
Supporting Holders’ loans under the Existing Credit Agreement for a
combination of cash and new loans under a new credit agreement (the
“Exchange Credit Agreement”). The Credit Agreement Supporting
Holders have also agreed to deliver their Consents (the “Credit
Agreement Exchange Requisite Consents”) with respect to certain
proposed amendments to the Existing Credit Agreement (the “Existing
Credit Agreement Proposed Amendments”). These amendments would,
among other things, permit the New Notes and the 2028 Private
Exchange Notes.
Pursuant to the proposed Credit Agreement Exchange,
approximately $813 million of revolving commitments and up to $758
million of term loans under the Existing Credit Agreement will be
exchanged for cash and debt under the Exchange Credit Agreement,
consisting of (i) a $187 million revolving credit facility
initially bearing interest at Term SOFR plus 2.75%; (ii) up to $986
million of a tranche of term loans bearing interest at Term SOFR
plus 7.125%; (iii) a $237 million term loan tranche bearing
interest at Term SOFR plus 6.125%; and (iv) a $45 million term loan
tranche bearing interest at Term SOFR plus 2.00%. All tranches of
debt under the Exchange Credit Agreement will have a 0.75% floor
and will mature on March 23, 2027, except for the $45 million term
loan tranche, which will mature on March 23, 2024. The principal
amount of certain tranches of term loans under the Exchange Credit
Agreement are subject to change based on the extent of term lender
participation in the transaction and certain elections
participating term lenders make.
The Company’s obligations to accept the Old Notes and Consents
in the Exchange Offers and the Consent Solicitations are subject to
the satisfaction or waiver of certain conditions described in the
Prospectus, including receipt of (i) the Old Notes Requisite
Consents for each series of Old Notes being tendered, (ii) the 2026
Notes Requisite Consents delivered in connection with the Private
Exchange, and (iii) the Credit Agreement Exchange Requisite
Consents delivered in connection with the Credit Agreement
Exchange. Each of the Exchange Offers and Consent Solicitations is
conditioned upon the consummation of the Private Exchange and the
Credit Agreement Exchange and the effectiveness of the 2026
Indenture Proposed Amendments and the Existing Credit Agreement
Proposed Amendments. The Private Exchange and the Credit Agreement
Exchange are conditioned on, among other things, the 2026 Notes
Supporting Holders and the Credit Agreement Supporting Holders,
respectively, having satisfied their obligations in all material
respects under the Support Agreement and the consummation of the
Exchange Offers and Consent Solicitations.
The completion of the Exchange Offers is subject to, and
conditioned upon, the satisfaction or waiver of certain conditions,
including, among other things, (i) the Registration Statement
having been declared effective by the SEC on or prior to the
Expiration Time and remaining effective on the Settlement Date (as
defined in the Prospectus) (which condition cannot be waived) and
(ii) the absence of any actual or threatened legal impediment to
the acceptance for exchange of, or exchange of, the Old Notes.
GEO will pay a soliciting broker fee equal to either (i) $2.50
for each $1,000 principal amount of Old Notes validly tendered for
exchange and not validly withdrawn under the Exchange Offers or
(ii) $0.50 for each $1,000 in principal amount of 2023 Notes for
which only the Consent is provided in connection with the 2023
Notes Consent, in each case to soliciting retail brokers for
holders holding less than $1,000,000 in aggregate principal amount
of the Old Notes that are appropriately designated by their clients
to receive this fee.
The Exchange Offers and Consent Solicitations are made only by
and pursuant to the terms and subject to the conditions set forth
in the Prospectus, which forms a part of the Registration
Statement, and the information in this news release is qualified by
reference to such Prospectus and the Registration Statement.
Holders of the Old Notes are urged to carefully read the
Prospectus before making any decision with respect to the Exchange
Offers and Consent Solicitations. None of the Company, the dealer
manager, the trustee with respect to any series of Old Notes, the
trustee with respect to the New Notes, the information agent and
exchange agent for the Exchange Offers, the supporting holders or
any affiliate of any of them makes any recommendation as to whether
holders of the Old Notes should exchange their Old Notes for New
Notes in the Exchange Offers, or whether holders of 2023 Notes
should consent in the applicable Consent Solicitation and no one
has been authorized by any of them to make such a
recommendation.
Holders of the Old Notes must make their own decision as to
whether to tender Old Notes and, if so, the principal amount of Old
Notes to tender. 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 103 facilities totaling
approximately 83,000 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 Exchange Offers and Consent
Solicitations, the Private Exchange and the Credit Agreement
Exchange. 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.
GEO disclaims any obligation to update or revise any
forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20220718005842/en/
Pablo E. Paez 1-866-301-4436 Executive Vice President, Corporate
Relations
Geo (NYSE:GEO)
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