GEO Group summarizes outstanding debt after transaction closing

Chicago, Aug. 25 – GEO Group Inc. provided a summary of its outstanding debt after closing on a series of transactions to reorganize its maturities, in transactions that S&P Global Ratings said they viewed as distressed as creditors received less than the amount they were originally promised, according to multiple press releases.

However, the transactions resulted in only a temporary ratings downgrade from S&P. The agency upgraded the company’s issuer rating to B from Selective Default, as the transactions reflected “significant improvement in GEO's near-term liquidity position following the debt exchange.”

The ratings on all of the unsecured notes shifted up to CCC+ from D.

GEO Group outlined its new outstanding debt amounts and maturities as the following: approximately $125 million in 2023; approximately $165 million in 2024; approximately $341 million in 2026; approximately $1.1 billion in 2027; and approximately $526 million in 2028.

The company said it expects to pay for the approximately $300 million of debt due in 2023 and 2024 with available liquidity, the expected future proceeds from the sale of certain non-core assets, and its current free cash flow run rate.

Notably, the company had $2 billion of debt coming due in 2023 and 2024 before it took on a series of liability management transactions with noteholders and bank loan lenders.

Further, GEO is aiming to reduce net recourse debt by $200 million to $250 million annually and decrease its net leverage to below 3.5x adjusted EBITDA by the end of 2023 and then lower, to 3x adjusted EBITDA by the end of 2024.

Currently, gross adjusted leverage, according to S&P, is in the low-5x range where it is expected to remain through 2023.

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

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