This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The GEO Group Signs Agreement To Purchase 100% Interest In Municipal Corrections Finance, L.P. For $27 Million

The GEO Group (NYSE: GEO) (“GEO”) announced today that it has signed a definitive agreement to purchase 100% of the partnership interests in Municipal Corrections Finance, L.P. (“MCF”) for approximately $27 million in cash plus the release of approximately $10 million in cash held in escrow for the benefit of MCF. MCF currently has $94 million in bond principal (the “MCF Bond”) outstanding, or $57 million in bond principal net of $36 million in restricted cash reserve funds. Closing of the transaction is subject to third party approvals, including consent of the MCF Bond trustee. The MCF Bond will not be recourse to nor be guaranteed by GEO.

MCF is a consolidated variable interest entity, which GEO assumed in August 2010 as a result of GEO’s acquisition of Cornell Companies, Inc. MCF was created in August 2001 as a special limited partnership to acquire eleven facilities which MCF leases back to GEO under a 20-year Master Lease Agreement ending in 2021, with options thereafter at GEO’s sole discretion to renew the sub-lease of each separate property for up to 25 additional years (the “Lease”).

As a result of the purchase of MCF, GEO will reduce future net cash payments associated with the Lease by $155 million over the remaining full term, inclusive of all renewal options and tax benefits. The net cash capital investment for GEO is $27 million, for which GEO will generate a return on capital at or above the rate typically generated by owned facilities. The transaction will also substantially increase GEO’s cash flows over the life of the Lease, which will enhance GEO’s ability to execute on its growth and shareholder value creation initiatives. Additionally, under the Lease, GEO is scheduled to have a five-year minimal rent period under the Lease starting approximately in 2016, resulting in estimated cash savings of $25 million per year based on the current annual cash rent payments to service the bonds. The transaction will have a neutral impact on earnings in the first year and will be accretive in future years. GEO expects to close the transaction during the second quarter of fiscal 2012.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

DOW 17,776.91 +93.33 0.53%
S&P 500 2,081.34 +12.58 0.61%
NASDAQ 4,997.4590 +5.5190 0.11%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs