S&P hikes GEO Group

S&P said it hiked the GEO Group Inc.’s issuer rating to B from SD, Selective Default, the rating on the outstanding secured term loan due March 2024 to BB- from D reflecting very high (90%-100%; rounded estimate: 95%) recovery in default, and the ratings on all the unsecured notes to CCC+ from D reflecting negligible (0%-10%; rounded estimate: 0%) recovery.

Additionally, the agency finalized the preliminary BB- issue-level and 1 recovery ratings on the new first-lien facilities and the preliminary B issue-level and 3 recovery ratings on the new second-lien notes.

“The B issuer credit rating reflects significant improvement in GEO's near-term liquidity position following the debt exchange. Under GEO's new capital structure, the company's near-term debt maturity burden over the next 24 months is reduced to about $300 million, from more than $2 billion. We forecast the company will manage these maturities with a healthy liquidity buffer of at least $200 million even if it executes no further asset sales,” S&P said in a press release.

The agency said it estimates gross adjusted leverage will remain in the low-5x range through 2023 with FOCF to debt of around 5% despite higher interest expense and a modest decline in earnings.

The outlook is stable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.