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Item 7.01
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Regulation FD Disclosure.
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Beginning in November 2021, The GEO Group, Inc. (“GEO” and, together with its direct or indirect subsidiaries, the “Company”) engaged in confidential discussions with (i) certain members of an ad hoc group of holders (the “Noteholder Group”) of the Company’s 5.125% Senior Notes due 2023, 5.875% Senior Notes due 2024, and 6.00% Senior Notes due 2026 (such notes, collectively, the “Senior Notes”), (ii) certain members of an ad hoc group of term lenders (the “Term Lender Group”) under the Company’s Third Amended and Restated Credit Agreement, dated as of March 23, 2017 (as subsequently amended, the “Credit Agreement” and the term loans made thereunder, the “Term Loans”), and (iii) the administrative agent and certain lenders that have provided revolving credit loans and commitments under the Credit Agreement (such lenders, the “RCF Lenders” and such loans, the “RCF Loans”) concerning a potential refinancing, exchange, recapitalization, or other transaction or series of transactions to reduce the Company’s funded recourse debt and address its nearer term maturities (a “Potential Transaction”). The Company undertook these discussions on a confidential basis pursuant to non-disclosure agreements with the applicable members of the Noteholder Group and the Term Lender Group, and, in the case of the RCF Lenders, the confidentiality provisions of the Credit Agreement.
In connection with these discussions, the Company delivered a presentation and an initial proposal for a Potential Transaction to the Noteholder Group, the Term Lender Group, and the RCF Lenders. The Company thereafter engaged in negotiations, and exchanged counterproposals, with each such creditor group.
As of January 5, 2022, the Company has not reached agreement with the Noteholder Group, the Term Lender Group, or the RCF Lenders with respect to the material terms of a Potential Transaction. Based on discussions with, and feedback from, these creditor groups, the Company anticipates that negotiations concerning a Potential Transaction will continue. In addition, the Company will continue to actively examine other options to address its funded recourse debt and its nearer term maturities, including but not limited to, capital markets transactions, repurchases, redemptions exchanges, refinancings, repayments of existing indebtedness, and/or potential sales of additional Company-owned assets, if opportunities to do so are available on acceptable terms.
Although the Company anticipates that negotiations with the above-referenced creditor groups toward a Potential Transaction will continue, in accordance with the terms of its non-disclosure agreements with the Noteholder Group and the Term Lender Group, the Company is disclosing through this Current Report certain information provided to the Noteholder Group and the Term Lender Group pursuant to such non-disclosure agreements and in connection with the above-referenced discussions and a summary of the most recent proposal for a Potential Transaction delivered by each of the Company, the Noteholder Group, and the Term Lender Group (the “Potential Transaction Information”). The Potential Transaction Information includes certain pro forma financial projections for fiscal years 2021 through 2024, predicated on consummation of the Potential Transaction, among other assumptions set forth therein. The Company’s actual results for the fourth quarter 2021 and the fiscal year ended December 31, 2021, will be reported in its forthcoming Annual Report on Form 10-K. The Potential Transaction Information is attached as Exhibit 99.1 hereto and incorporated herein by reference.
For information concerning the Noteholder Group, holders of the Senior Notes may contact Houlihan Lokey Capital, Inc., the financial advisor to the Noteholder Group, by email at bondholders@hl.com.
The information furnished in Item 2.02 above and this Item 7.01, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. The filing of this Item 7.01 of this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation FD.
Forward-looking statements
This Current Report on Form 8-K (including Exhibit 99.1 hereto) contains forward-looking statements regarding future events and future performance of GEO that involve risks and uncertainties that could materially and adversely affect actual results, including statements regarding GEO’s proposed steps and potential alternatives to address its future debt maturities. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” or “continue” or the negative of such words and similar expressions. Risks and uncertainties that could cause actual results to vary from current expectations and forward-looking statements contained in this Current Report include, but are not limited to: (i) GEO’s ability to meet its financial guidance for 2021 given the various risks to which its business is exposed; (ii) GEO’s ability to reach agreement concerning a Potential Transaction on advantageous terms or at all, or otherwise deleverage and repay, refinance, or otherwise address its debt maturities in an amount or on the timeline it expects, or at all; (iii) GEO’s ability to obtain financing or access the capital