S&P: GEO Group on watch

Standard & Poor's said the ratings on The GEO Group Inc. (formerly known as Wackenhut Corrections Corp.) remained on CreditWatch with negative implications where they were placed on March 5.

The CreditWatch update follows the announcement by Danish firm Group 4 Falck that GEO did not win the £200 million bid to purchase Falck's prison management unit, Global Solutions.

GEO has until June 28 to enter into a definitive agreement to reinvest net cash proceeds obtained from the recent sale of its U.K. joint venture Premier Custodial Services Ltd., otherwise it will be required to apply the proceeds toward debt reduction.

S&P said it remains concerned that, despite its unsuccessful attempt to purchase Global Solutions, GEO will continue to pursue opportunities to reinvest the proceeds from Premier Custodial, totaling $52 million. Any potential incremental debt related to a sizable acquisition would exacerbate an already highly leveraged capital structure.

S&P rates GEO's corporate credit rating at B+, senior unsecured debt at B, and senior secured debt at BB-.

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