S&P slashes GEO Group

S&P said it slashed Geo Group Inc. and its issue ratings by two notches, including its issuer rating to CCC+ from B.

“The downgrade follows GEO's announcement that it has hired advisors to explore various alternatives for its capital structure. We note the company has not communicated a recapitalization plan. However, operating conditions have become increasingly complex since President Biden's January 2021 executive order instructing the U.S. Department of Justice (DOJ) not to renew contracts with privately operated criminal-detention facilities,” S&P said in a press release.

GEO had about $459 million of available cash balances as of March 31. “We expect cash balances will build to over $600 million by year-end 2021. GEO's earliest maturity is April 1, 2023, when about $279 million of 5.125% senior notes matures, and in 2024 when about $1.78 billion of debt matures. Accordingly, we believe the company has sufficient time to consider and negotiate its capital structure alternatives,” S&P said in a press release.

The outlook is negative.

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