Section 1 – Registrant’s Business and Operations
| Item 1.01. | Entry into a Material Definitive Agreement. |
On February 24, 2021, GEO Corrections Holdings, Inc. (“GEOCH”), a subsidiary of The GEO Group, Inc. (“GEO” or the “Company”), closed its previously announced private offering (the “Notes Offering”) of $230.0 million aggregate principal amount of 6.50% exchangeable senior notes due 2026 (the “Notes”), including $30.0 million aggregate principal amount of Notes sold pursuant to the exercise in full of the initial purchasers’ over-allotment option to purchase additional Notes. The Notes were sold in a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Notes were issued pursuant to an indenture, dated February 24, 2021, by and among GEOCH, as issuer, the Company, as guarantor, GEO’s subsidiaries that are guarantors under GEO’s senior credit facility and outstanding senior notes (the “Subsidiary Guarantors”) and the trustee (the “Indenture”). The Notes are guaranteed by the Company and the Subsidiary Guarantors on a senior unsecured basis.
In connection with the Notes Offering, GEOCH received gross proceeds of $230.0 million and net proceeds, after initial purchasers’ discounts and offering expenses, of $221.1 million. GEOCH and the Company used the net proceeds of this Notes Offering, including the exercise in full of the initial purchasers’ over-allotment option to purchase additional Notes, to fund the repurchase, redemption or other discharge of the current outstanding amount of $194.0 million of the Company’s existing 5.875% senior notes due 2022 and intend to use remaining net proceeds to pay related transaction fees and expenses, and for general corporate purposes of the Company.
The Notes will mature on February 23, 2026, unless earlier repurchased or exchanged. GEOCH will pay to the noteholders cash interest at an annual rate of 6.50% (the “fixed interest”) plus an additional amount of cash interest, if any (referred to as the “contingent interest”) based on the amount of dividends paid by the Company on its common stock, $0.01 par value per share (the “Company’s common stock”) during the interest period in excess of an excluded dividend amount ($0.00 per share), but not to exceed the excess dividend cap amount (initially, $0.34 per share, subject to adjustment). Interest will be payable semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021.
Subject to certain restrictions on share ownership and transfer, holders may exchange the Notes at their option prior to the close of business on the business day immediately preceding November 25, 2025, but only under the following circumstances: (1) during the five consecutive business day period after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of Notes for each trading day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the exchange rate for the Notes on each such trading day; or (2) upon the occurrence of certain specified corporate events. On or after November 25, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes, holders may exchange their Notes at any time, regardless of the foregoing circumstances. Upon exchange of a Note, GEO will pay or deliver, as the case may be, cash or a combination of cash and shares of the Company’s common stock.
If the Company or GEOCH undergoes a fundamental change, holders may require GEOCH to purchase the Notes in whole or in part for cash at a fundamental change purchase price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.
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