The GEO Group GEO announced today that it has completed the
previously announced acquisition of 100% of the partnership interests in
Municipal Corrections Finance, L.P. (“MCF”) for approximately $27 million. In
connection with the acquisition, GEO redeemed the MCF bonds for approximately
$67.0 million, net of bond cash reserves and inclusive of a make whole premium
of approximately $15.0 million. The MCF bonds had a cash coupon rate of 8.47
percent and a net effective interest carrying cost of approximately 5.5
percent. The transaction gives GEO full ownership interest in 11 correctional
properties, representing 10,000 beds, which were leased and operated by GEO
and will save GEO approximately $155.0 million in future net cash payments,
becoming accretive to earnings after 2012.
GEO financed the acquisition of the partnership interests in MCF and the
redemption of the MCF bonds with a new $100.0 million, three-year term loan
under its Senior Credit Facility. The new term loan bears interest at the same
rate of GEO's existing revolver line of credit at LIBOR plus 2.75 percent. In
connection with this transaction, GEO also amended its Senior Credit Facility
to increase its initial restricted payment basket to $50.0 million and
increase the senior secured leverage ratio test to access the net income-based
restricted payment basket from 2.5x to 2.75x.
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