Item 1.01.
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Entry into a Material Definitive Agreement.
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On April 17, 2018, CoreCivic, Inc., a
Maryland corporation (the Company), entered into a Second Amended and Restated Credit Agreement dated as of April 17, 2018, by and among the Company, as Borrower, certain lenders party thereto from time to time, and Bank of America,
N.A., as Administrative Agent for the lenders (the New Credit Facilities). The New Credit Facilities effectively replace the Companys existing senior secured credit facilities.
Availability
The
New Credit Facilities are in the aggregate principal amount of $1.0 billion, consisting of a $200 million term loan and an $800 million revolving credit facility that has a $30 million sublimit for swingline loans and a
$50 million sublimit for the issuance of standby letters of credit. In addition, the Company has an option to increase the availability under the revolving credit facility and to request term loans from the lenders in an aggregate amount not to
exceed $350 million subject to, among other things, the receipt of commitments for the increased amount. The New Credit Facilities mature on April 17, 2023.
Collateral and Guarantees
The loans and other obligations under the New Credit Facilities are guaranteed by each of the Companys domestic restricted subsidiaries.
The Companys obligations under the New Credit Facilities and the guarantees are secured by, among other things:
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all of the capital stock (or other ownership interests) of the Companys domestic restricted subsidiaries and 65% of the capital stock (or other ownership interests) of the Companys first-tier
foreign subsidiaries;
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the accounts receivable of the Company and its domestic restricted subsidiaries; and
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substantially all of the deposit accounts of the Company and its domestic restricted subsidiaries.
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Interest and Fees
The Companys borrowings under the New Credit Facilities bear interest at rates that, at the Companys option, can be either:
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a base rate defined as the sum of (i) the higher of (x) the Administrative Agents prime rate, (y) the average overnight federal funds effective rate plus
one-half
of percent (0.50%) per annum and
(z) one-month
LIBOR plus one percent (1.0%) per annum and (ii) an applicable margin, based on the Companys
total leverage ratio (consolidated total debt net of cash/consolidated EBITDA).
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a LIBOR rate defined as the sum of (i) LIBOR (as published by Bloomberg or other commercially available source) for one, two, three or six months (or, if approved by the relevant lenders, twelve months), as
selected by the Company, and (ii) an applicable margin based on the Companys total leverage ratio.
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The initial
applicable margin for base rate loans is 0.50%, and the initial applicable margin for LIBOR loans is 1.50%. The applicable margins will be adjusted quarterly, in each case ten (10) business days after the Administrative Agents receipt of
the Companys quarterly financial statements.
Interest on base rate loans is payable quarterly in arrears, and interest on LIBOR
loans is payable at the end of each interest period (but not less often than every three months).
The Company is also required to pay a
commitment fee on the difference between committed amounts under the revolving credit facility and amounts other than swing line loans actually used under the revolving credit facility, which fee initially is 0.35% per annum, subject to
adjustment in the same manner as the applicable margins for interest rates.
Certain Covenants
The New Credit Facilities require the Company to meet certain financial tests, including, without limitation:
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a consolidated total leverage ratio (consolidated total debt net of cash/consolidated EBITDA) of not more than 5.50 to 1.00;
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a consolidated secured leverage ratio of not more than 3.25 to 1.00 (consolidated secured debt net of cash/consolidated EBITDA); and
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a consolidated fixed charge coverage ratio (consolidated EBITDA/consolidated fixed charges) of not less than 1.75 to 1.00.
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In addition, the New Credit Facilities contain certain customary affirmative and negative covenants.
Events of Default
The New Credit Facilities contains customary events of default, including, without limitation, payment defaults, breaches of representations
and warranties, covenant defaults, cross-defaults to certain other material indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts and change in
control.
Certain of the lenders under the New Credit Facilities or their affiliates have provided, and may in the future provide, certain
commercial banking, financial advisory, and investment banking services in the ordinary course of business for the Company, its subsidiaries and certain of its affiliates, for which they receive customary fees and commissions.
The foregoing description of the New Credit Facilities does not purport to be complete and is
qualified in its entirety by reference to the credit agreement governing the New Credit Facilities, which is attached hereto as
Exhibit 10.1
to this Current Report on Form
8-K
and is incorporated
herein by reference.