GEO Group, formerly known as Wackenhut Corrections, will hit up BNP Paribas for $360 million in debt financing this Thursday. The credit will fund its acquisition of CentraCore Properties Trust for approximately $356.1 million. GEO will also refinance about $40 million of CPT's existing debt.
The credit comprises a $130 million term loan "B." It is also increasing the revolver by $50 million from $100 million to $150 million. Pricing is expected to be LIBOR plus 2% on the revolver and LIBOR plus 2 1/4% on the term loan, according to a banker. He expected Moody's Investors Service to assign a corporate credit rating around Ba3.
"When they first did it, they paid back the term loan with a bond issue" but kept the revolver, said the banker. "Now they are re-adding a term loan." In 2003, the company repurchased 12 million shares from Group 4 Falck, the company's previous majority shareholder. The repurchase was funded by a $150 million credit also from BNP in June 2003. The $100 million term loan "B," which was priced at LIBOR plus 3 3/4%, was oversubscribed before the bank meeting and pricing was cut to LIBOR plus 3% (LMW, 8/24/2003). The share repurchase agreement required Wackenhut to change its name to GEO Group by July 2004.
Based in Boca Raton, Fla., GEO delivers correctional, detention and residential treatment services to federal, state and local government agencies. Palm Beach Gardens-based CentraCore owns 13 correctional facilities, 11 of which are currently leased to GEO under sale-lease back agreements. Calls to a GEO spokesman were not returned.