GEO Group expecting $220 million outstanding on revolver after merger, Georgia project

By Jennifer Lanning Drey

Portland, Ore., Aug. 13 - GEO Group, Inc. expects to have about $220 million in borrowings outstanding under its revolving credit facility following its merger with Cornell Cos. and the completion of a recently announced 1,500-bed project in Georgia, Brian Evans, its chief financial officer, said Friday.

The company expects to have $120 million to $130 million of borrowing capacity at that point after accounting for $50 million set aside for letters of credit, Evans said during GEO's second-quarter earnings conference call.

Additionally, GEO expects to generate $160 million to $170 million in adjusted funds from operations annually following the Cornell merger, which closed on Aug. 12, he said.

"With our available borrowing capacity and our strong cash generation, we are well positioned to continue to pursue future growth opportunities," Evans said.

The company has $94 million of committed development capital expenditures, $53 million of which was completed in the first half of the year.

In connection with the Cornell merger, GEO recently completed a new $750 million senior credit facility, comprised of a five-year $150 million term loan A, six-year $200 million term loan B and a five-year $400 million revolving credit facility.

GEO Group reported income from continuing operations of $17.0 million for the second quarter, compared to income from continuing operations of $16.5 million for the same period in the prior year.

Second-quarter adjusted EBITDA increased to $45.8 million from $42.3 million in the second quarter of 2009.

"Today, we reported strong second-quarter results, driven by the continued solid performance from our core operations in our three business units," George Zoley, GEO's chief executive officer, said during the call.

The company said the Cornell merger is expected to increase GEO's total annual revenues by between $400 million and $1.5 billion, as well as substantially increase EBITDA, net income and adjusted funds from operations on a fully annualized basis.

Boca Raton, Fla.-based GEO Group is a prison operator.

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