Geo Group agrees to purchase Municipal Corrections Finance for $27M

theflyonthewall.com

The GEO Group announced that it has signed a definitive agreement to purchase 100% of the partnership interests in Municipal Corrections Finance, for approximately $27M in cash plus the release of approximately $10M in cash held in escrow for the benefit of MCF. 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 currently has $94M in bond principal outstanding. 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. As a result of the purchase of MCF, GEO will reduce future net cash payments associated with the Lease by $155M over the remaining full term, inclusive of all renewal options and tax benefits. The net cash capital investment for GEO is $27M, for which GEO will generate a return on capital at or above the rate typically generated by owned facilities. 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 Q2.

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