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Corrections Corporation of America Message Board

  • dy2 dy2 Apr 19, 2005 7:01 PM Flag

    CXW reducing its interest rates again

    This is undoubtedly a reflection of their very strong free cash flow, capable management and continuing high arrest rates in this Country, with corresponding lack of State and Federal funds to build new prisons. This state of affairs is bound to continue because Politicians find it easy to spend taxpayers money and create new programs without regard to the burdens it creates for the future. The joy of surplus spending by governments created by the artificial boosting of tax revenues during the dot com bubble will result in continuing state budget problems for the foreseeable future. The results will only be good for CXW.


    Entry Material Agreement, Financial Statements and Exhibits

    Item 1.01 Entry into a Material Definitive Agreement
    On April 18, 2005, Corrections Corporation of America (the "Company") entered into an Eighth Amendment (the "Amendment") to its Third Amended and Restated Credit Agreement, dated as of May 3, 2002, by and among the Company, as Borrower, the several lenders from time to time party thereto, Lehman Brothers Inc., as Sole Lead Arranger and Sole Book-Running Manager, Deutsche Bank Securities Inc. and UBS Warburg LLC, as Co-Syndication Agents, Soci�t� G�n�ral�, as Documentation Agent, and Lehman Commercial Paper Inc., as Administrative Agent (the "Credit Agreement"). The Amendment is subject to customary terms and conditions and provides for the following:

    (1) The eurodollar rate margin paid on term loans is reduced from 2.25% to 1.75%, and the base rate margin paid on term loans is reduced from 1.25% to 0.75%;

    (2) Advances under the revolving loan facility will be used to reduce the aggregate outstanding balance of the term loans from approximately $160 million to approximately $140 million. Quarterly principal amortization of the term debt will be reduced as a result of this and prior reductions in the aggregate outstanding balance of the term loans;

    (3) The eurodollar rate margin paid on revolving loans and letters of credit is reduced from 3.50% to 1.50%, and the base rate margin paid on revolving loans is reduced from 2.50% to 0.50%; and

    (4) The fee paid on the unused balance of the revolving loan facility is reduced from 0.500% to 0.375%.

    The maturity and the capacity of these credit facilities will remain unchanged."

33.40+1.86(+5.90%)4:02 PMEDT