The GEO Group Suspends Quarterly Dividend to Maximize Repayment of Debt While It Evaluates Corporate Structure
April 07 2021 - 6:55AM
Business Wire
The GEO Group, Inc. (NYSE: GEO) (“GEO”) announced today
that its Board of Directors (the “Board”) has immediately suspended
GEO’s quarterly dividend payments with the goal of maximizing the
use of cash flows to repay debt, deleverage, and internally fund
growth. GEO currently intends to maintain its corporate tax
structure as a Real Estate Investment Trust (“REIT”), but the Board
has determined to undertake an evaluation of GEO's structure as a
REIT.
The Board’s evaluation of the current corporate tax structure
and GEO’s REIT status is expected to take into consideration, among
other factors, potential changes to GEO’s financial operating
performance, as well as, potential changes to the Internal Revenue
Code of 1986, as amended (the "Code") applicable to U.S.
corporations and REITs. The Board expects to conclude its
evaluation in the fourth quarter of 2021, and should the Board
determine not to change its current intent to maintain GEO’s REIT
status, an additional dividend payment may be required before
year-end in order to meet the minimum REIT distribution
requirements under the Code.
As of March 31, 2021, GEO had $291 million in cash on hand and
approximately $209 million in borrowing capacity available under
GEO’s revolving credit facility, in addition to an accordion
feature of $450 million under GEO’s senior credit facility. GEO has
cancelled approximately $35 million in capital expenditures
previously planned for 2021 and has set a goal of repaying a
minimum of $125-$150 million in net debt during 2021.
About The GEO Group
The GEO Group (NYSE: GEO) is a fully integrated equity real
estate investment trust specializing in the design, financing,
development, and operation of secure facilities, processing
centers, and community reentry centers in the United States,
Australia, South Africa, and the United Kingdom. GEO is a leading
provider of enhanced in-custody rehabilitation, post-release
support, electronic monitoring, and community-based programs. GEO’s
worldwide operations include the ownership and/or management of 116
facilities totaling approximately 92,000 beds, including idle
facilities and projects under development, with a workforce of up
to approximately 21,000 professionals.
Safe-Harbor Statement
This press release contains forward-looking statements regarding
future events and future performance of GEO that involve risks and
uncertainties that could materially affect actual results,
including statements regarding the Board’s decision to immediately
suspend GEO’s quarterly dividend payments with the goal of
maximizing the use of cash flows to repay debt, deleverage, and
internally fund growth, while the Board evaluates GEO’s current
corporate tax structure and REIT status. Risks and uncertainties
that could cause actual results to vary from current expectations
and forward-looking statements contained in this press release
include, but are not limited to: (1) the Board’s ability to
evaluate and conclude its evaluation regarding GEO’s corporate tax
structure and REIT status by the fourth quarter of 2021; (2) GEO’s
ability to cancel capital expenditures previously planned for 2021
and meet its debt repayment goal for 2021; (3) the timing and scope
of potential changes to the Code applicable to U.S. corporations
and REITs; (4) changes in federal and state government policy,
orders, directives, legislation and regulations that affect
public-private partnerships with respect to secure, correctional
and detention facilities, processing centers and reentry centers,
including the timing and scope of implementation of President
Biden's Executive Order directing the U.S. Attorney General not to
renew the U.S. Department of Justice contracts with privately
operated criminal detention facilities; (5) changes in federal
immigration policy; (6) public and political opposition to the use
of public-private partnerships with respect to secure correctional
and detention facilities, processing centers and reentry centers;
(7) the magnitude, severity, and duration of the current COVID-19
global pandemic, its impact on GEO and GEO's ability to mitigate
the risks associated with COVID-19; (8) GEO’s ability to sustain or
improve company-wide occupancy rates at its facilities in light of
the COVID-19 global pandemic and policy and contract announcements
impacting GEO’s federal facilities in the United States; (9)
fluctuations in our operating results, including as a result of
contract terminations, contract renegotiations, changes in
occupancy levels and increases in our operating costs, (10) general
economic and market conditions, including changes to governmental
budgets and its impact on new contract terms, contract renewals,
renegotiations, per diem rates, fixed payment provisions, and
occupancy levels (11) GEO’s ability to timely open facilities as
planned, profitably manage such facilities and successfully
integrate such facilities into GEO’s operations without substantial
costs; (12) GEO’s ability to win management contracts for which it
has submitted proposals and to retain existing management
contracts; (13) risks associated with GEO’s ability to control
operating costs associated with contract start-ups; (14) GEO’s
ability to successfully pursue growth and continue to create
shareholder value; (15) GEO’s ability to obtain financing or access
the capital markets in the future on acceptable terms or at all;
(16) GEO’s ability to remain qualified as a REIT, including its
ability to declare future dividend payments, should the Board
determine not to change its current intent to maintain GEO’s REIT
status; and (17) other factors contained in GEO’s Securities and
Exchange Commission periodic filings, including its Form 10-K, 10-Q
and 8-K reports.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210407005204/en/
Pablo E. Paez (866) 301 4436 Executive Vice President, Corporate
Relations
Geo (NYSE:GEO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Geo (NYSE:GEO)
Historical Stock Chart
From Sep 2023 to Sep 2024