Moody's rates GEO Group loans Ba3

Moody's Investors Service said it assigned a provisional Ba3 rating to GEO Group, Inc.'s proposed $750 million senior secured credit facility, consisting of a new $400 million five-year revolving credit facility, $150 million five-year term loan A and $200 million six-year term loan B. The facility is intended to partially finance the acquisition of Cornell Cos., Inc.

All of the ratings remain under review with direction uncertain pending the completion of its merger with Cornell, which is expected to close in the third quarter.

In April, the GEO Group announced plans to acquire Cornell for a deal estimated at $685 million, including the assumption of about $300 million in Cornell debt, Moody's said.

The agency said effective leverage is expected to increase to 43% upon closing from 37% as of April 4 and secured debt will increase to 32% from 21%. Other concerns center on the successful integration of the two companies, Moody's said.

Counterbalancing these concerns, the acquisition will add size and diversity to GEO Group, the agency said.

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