GEO Group gives results of exchange offer and consent solicitation

By Mary-Katherine Stinson

Lexington, Ky., Aug. 17 – GEO Group Inc. announced the results of its exchange offer for any and all of the notes from two series with separate consent solicitations, according to a press release Wednesday.

The offer expired at 5 p.m. ET on Aug. 16 which was also the withdrawal and revocation deadline.

As previously reported, the exchange offers applied to the $259,275,000 outstanding 5 1/8% senior notes due 2023 (Cusip: 36159RAG8) and the $225,293,000 outstanding 5 7/8% senior notes due 2024 (Cusip: 36162JAA4).

As of the expiration of the offer there were approximately $134 million of the 2023 notes validly tendered and consents had been received for an additional approximately $50 million of the 2023 notes. Approximately $202 million of the 2024 notes were validly tendered.

This reflects support from approximately 71% of noteholders for the 2023 notes and approximately 90% of the 2024 notes.

Specifically, in the case of the 2023 notes, $133,541,000 were tendered and $49,542,000 of consents were delivered. Holders of 70.6% of the principal amount delivered their consents. For the 2023 notes, noteholders could tender their notes with a related consent or only consent.

In the case of the 2024 notes, $202.04 million were tendered. Holders of 89.7% of the principal delivered their consents. There was no separate consent solicitation for the 2024 notes. Tendering noteholders were deemed to have given consent.

Tendering noteholders had a choice between receiving only notes, 10˝% senior second-lien secured notes maturing on June 30, 2028, or a combination of notes and cash.

For the 2023 notes, noteholders will receive $1,050 in new notes or $300 of new notes and $700 in cash.

For the 2024 notes, noteholders will receive $1,039 in new notes or $750 in new notes and $250 in cash.

Accrued interest will also be paid.

As of the expiration, holders of approximately $87 million of the 2023 notes selected the 2023 notes-only consideration, and holders of approximately $108 million of the 2024 notes selected the 2024 notes-only consideration.

As a result, approximately $287 million total principal amount of new notes will be issued.

Settlement for each exchange offer and consent solicitation is expected for Aug. 19.

Support agreement

Separately, the company entered into a support agreement with certain lenders under the company’s existing credit agreement and certain holders of the company’s 2023 and 2024 notes on July 18.

Holders of approximately 41% of the outstanding 2023 notes and around 65% of the outstanding 2024 notes agreed 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, the company entered into an agreement with holders of approximately 68% of the outstanding principal amount of the company’s 2026 notes to exchange approximately $239.1 million of the notes for newly issued 9˝% senior second-lien secured notes due 2028. The same noteholders also agreed to deliver their consents with respect to a series of amendments to the indenture governing the 2026 notes that will be substantially similar to the proposed amendments.

Credit agreement

Holders of approximately 74% of the company’s revolving credit and term loans have also collectively agreed to exchange their existing loans for a combination of cash and new loans under a new credit agreement.

Those holders have also agreed to consent to changes under the existing credit agreement, which 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 a $187 million revolving credit facility initially bearing interest at SOFR plus 275 basis points; up to $986 million of a tranche of term loans bearing interest at SOFR plus 712.5 bps and a $237 million term loan tranche bearing interest at SOFR plus 612.5 bps; and a $45 million term loan tranche bearing interest at SOFR plus 200 bps

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.

Details

The exchanges are conditioned upon all of the other exchange offers being consummated.

GEO stated it expects all the offers and transactions, which are a part of a comprehensive strategy the company has proposed to address its nearer-term debt maturities, to close on the settlement day.

GEO will pay a soliciting broker fee of $2.50 per $1,000 note tendered in the exchange of $0.50 per $1,000 note for which a consent is provided for the 2023 notes.

D.F. King & Co., Inc is the information and exchange agent for the offers (800 290-6428, 212 269-5550, geo@dfking.com).

Lazard is the dealer manager and solicitation agent (212 632-6311).

The GEO Group is a Boca Raton, Fla.-based correctional facilities-focused real estate investment trust.

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