Wackenhut Corrections Corp. completed $300 million in new bank debt and unsecured notes primarily to fund the $132 million repurchase of the company's 12 million shares held by Group 4 Falck, a Denmark-headquartered global security services provider, explained John O'Rourke, senior v.p. finance and cfo. The shares gave Group 4 Falck a 57% interest in the company, he added. The financing includes a new $50 million, five-year revolver and a $100 million, six-year "B" loan, both priced at LIBOR plus 3%. The company also tapped the high-yield markets for $150 million of 10-year, 81/4% senior unsecured notes.
O'Rourke explained that the company wanted to obtain as much of the financing as possible in the bank debt market and then complement the credit with a bond offering. "We certainly wanted to avail ourselves of what was available in the capital markets," he said. The new financing also allows the company to replace a $175 million credit that was led by BNP Paribas and Wachovia Securities. This credit was completed at the end of 2002 to refinance a synthetic lease. The former facility comprised a $50 million revolver and a $125 million term loan, priced at LIBOR plus 3% and LIBOR plus 4%, respectively. There is a 2% LIBOR floor on the term loan.
BNP Paribas leads the new credit facility, but Wachovia did not participate. O'Rourke declined to comment on why the bank bowed out. Lehman Brothers joined BNP Paribas to lead the bond deal. "We wanted to pull together a team we felt was a first class combined effort," said O'Rourke. "This entire exercise gave us the ability to get back into the capital markets," he added. The last time the company tapped the capital markets was in 1996 for a secondary equity offering.