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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 8, 2011
(Exact Name of Registrant as Specified in Charter)
(State or Other Jurisdiction of Incorporation)
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| 1-14260
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65-0043078 |
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| (Commission File Number)
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(IRS Employer Identification No.) |
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| 621 NW 53rd Street, Suite 700, Boca Raton, Florida
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33487 |
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| (Address of Principal Executive Offices)
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(Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Section 1 — Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Offering of 2021 Notes
On February 10, 2011, The GEO Group, Inc. (“GEO”) completed the previously announced issuance
of $300.0 million in aggregate principal amount of ten-year, 6 5/8% senior unsecured notes due 2021
(the “2021 Notes”) in a private offering under an Indenture dated as of February 10, 2011 (the
“2021 Indenture”) among GEO, certain of its domestic subsidiaries, as guarantors (the
“Guarantors”), and Wells Fargo Bank, National Association, as trustee. The 2021 Notes were offered
and sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of
1933, as amended (the “Securities Act”), and outside the United States in accordance with
Regulations S under the Securities Act. The 2021 Notes were issued at a coupon rate and yield to
maturity of 6.625%. Interest on the 2021 Notes will accrue at the rate of 6.625% per annum and
will be payable semi-annually in arrears on February 15 and August 15, commencing on August 15,
2011. The 2021 Notes mature on February 15, 2021.
Up to 35% of the aggregate principal amount of the 2021 Notes may be redeemed before February
15, 2014 with the net cash proceeds from certain equity offerings at a redemption price of 106.625%
of the principal amount thereof, plus accrued and unpaid interest (including liquidated damages, if
any, owing under the Registration Rights Agreement referred to below (“Liquidated Damages”)) to the
redemption date. In addition, GEO may, at its option, redeem the 2021 Notes in whole or in part
prior to February 15, 2016 at a redemption price equal to 100% of the principal amount of the 2021
Notes being redeemed plus a “make whole” premium, together with accrued and unpaid interest
(including Liquidated Damages, if any) to the redemption date.
On or after February 15, 2016, GEO may, at its option, redeem the 2021 Notes in whole or in
part at the redemption prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest (including Liquidated Damages, if any), on the 2021 Notes redeemed, to
the applicable redemption date, if redeemed during the 12-month period beginning on February 15 of
the years indicated below:
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Percentage |
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2016 |
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103.3125 |
% |
2017 |
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102.2083 |
% |
2018 |
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101.1042 |
% |
2019 and thereafter |
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100.0000 |
% |
If there is a “change of control” (as defined in the 2021 Indenture), holders of the 2021
Notes will have the right to cause GEO to repurchase their 2021 Notes at a price equal to 101% of
the principal amount of the 2021 Notes repurchased plus accrued and unpaid interest (including Liquidated
Damages, if any) to the purchase date.
The 2021 Notes and the guarantees are unsecured, unsubordinated obligations of GEO and the
Guarantors. The 2021 Notes rank equally in right of payment with any unsecured, unsubordinated
indebtedness of GEO and the Guarantors, including GEO’s 73/4% senior notes, senior in right of payment
to any future indebtedness of GEO and the Guarantors that is expressly subordinated to the 2021
Notes and the guarantees, effectively junior to any secured indebtedness of GEO and the Guarantors,
including indebtedness under GEO’s senior credit facility, to the extent of the value of the assets
securing such indebtedness, and structurally junior to all obligations of GEO’s subsidiaries that
are not Guarantors.
The 2021 Indenture contains covenants which, among other things, limit the ability of GEO and
its “restricted subsidiaries” (as defined in the 2021 Indenture) to incur additional indebtedness
or issue preferred stock, make dividend payments or other restricted payments, create liens, sell
assets, enter into transactions with affiliates, and enter into mergers, consolidations or sales of
substantially all of their assets. These covenants are subject to a number of limitations and
exceptions as set forth in the 2021 Indenture.
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The 2021 Indenture also contains events of default with respect to, among other things, the
following: failure by GEO to pay interest (including Liquidated Damages, if any) on the 2021 Notes
when due, which failure continues for 30 days; failure by GEO to pay the principal of, or premium,
if any, on, the 2021 Notes when due; failure by GEO or any of its restricted subsidiaries to comply
with their obligations to offer to repurchase the 2021 Notes at the option of the holders of the
2021 Notes upon a change of control, to offer to redeem notes under certain circumstances in
connection with asset sales with “excess proceeds” (as defined in the 2021 Indenture) in excess of
$25 million or to observe certain restrictions on mergers, consolidations and sales of
substantially all of their assets; the failure by GEO or any Guarantor to comply with any of the
other agreements in the 2021 Indenture, which failure continues for 60 days after notice; and
certain events of bankruptcy or insolvency of GEO or a restricted subsidiary that is a significant
subsidiary or any group of restricted subsidiaries that together would constitute a significant
subsidiary.
Under the terms of a Registration Rights Agreement dated as of February 10, 2011, GEO has
agreed to register under the Securities Act notes having terms identical in all material respects
to the 2021 Notes (the “Exchange Notes”) and to make an offer to exchange the Exchange Notes for
the 2021 Notes. Pursuant to the terms of the Registration Rights Agreement, GEO has agreed to use
its best efforts to file and have declared effective a registration statement with respect to an
offer to exchange the Exchange Notes for the 2021 Notes on or prior to 180 days after the closing
of the offering of the 2021 Notes. If GEO fails to satisfy certain filing and other obligations
with respect to the exchange, GEO will be obligated to pay additional interest of 0.25% per annum
for the first 90-day period and an additional 0.25% per annum with respect to each subsequent
90-day period thereafter, until GEO’s registration obligations are fulfilled, up to a maximum of
1.00% per annum.
The foregoing is qualified in its entirety by reference to the Indenture, a copy of which is
filed herewith as Exhibit 4.1, and the Registration Rights Agreement, a copy of which is filed
herewith as Exhibit 10.1. A copy of the press release announcing the issuance of the 2021 Notes is
filed herewith as Exhibit 99.1.
GEO used the net proceeds from its offering of the 2021 Notes together with borrowings of $150.0
million under GEO’s senior credit facility to finance its previously announced acquisition of B.I.
Incorporated discussed below. Any remaining net proceeds from the
offering of the 2021 Notes may be used to repay amounts outstanding under GEO’s revolving credit facility.
Credit Agreement Amendment
On February 8, 2011, GEO entered into Amendment No. 1, dated as of February 8, 2011, to the
Credit Agreement dated as of August 4, 2010, by and among GEO, the Guarantors party thereto, the
lenders party thereto and BNP Paribas, as administrative agent, (“Amendment No. 1”). Amendment No.
1, among other things amended certain definitions and covenants relating to the total leverage
ratios and the senior secured leverage ratios set forth in the Credit Agreement.
Effective February 10, 2011, the revolving credit commitments under the credit facility were
increased by an aggregate principal amount equal to $100 million, resulting in an aggregate of $500
million of revolving credit commitments. Also effective February 10, 2011, GEO obtained an
additional $150 million of term loans under the credit facility, specifically under a new $150
million incremental Term Loan A-2, initially bearing interest at LIBOR plus 2.75%. Following the
execution of Amendment No. 1 and GEO’s obtaining the additional $150 million incremental Term Loan
A-2, GEO’s senior credit facility is comprised of: a $150 million Term Loan A maturing August 4,
2015; a $150 million Term Loan A-2 maturing August 4, 2015; a $200 million Term Loan B maturing
August 4, 2016; and a $500 million Revolving Credit Facility maturing August 4, 2015. GEO used the
funds from the new $150 million incremental Term Loan A-2 along with the net cash proceeds from the
offering of the 2021 Notes to finance the acquisition of B.I. Incorporated discussed below. GEO
continues to have the ability to increase its senior credit facility by an additional $250 million,
subject to lender demand and satisfying the borrowing conditions thereunder.
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Following
the execution of Amendment No. 1, GEO may not exceed the following total
leverage ratios, as computed at the end of each fiscal quarter for the immediately preceding four
quarter-period:
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Total Leverage Ratio- |
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| Period |
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Maximum Ratio |
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Through and including the last day of fiscal year 2011 |
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5.25 to 1.00 |
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First day of fiscal year 2012 through and including the
last day of fiscal year 2012 |
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5.00 to 1.00 |
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First day of fiscal year 2013 through and including the
last day of fiscal year 2013 |
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4.75 to 1.00 |
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Thereafter |
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4.25 to 1.00 |
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Following the execution of Amendment No. 1, GEO may not exceed the following senior
secured leverage ratios, as computed at the end of each fiscal quarter for the immediately
preceding four quarter-period:
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Senior Secured |
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Leverage Ratio- |
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Maximum Ratio |
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Through and including the last day of the second quarter of fiscal year 2012 |
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3.25 to 1.00 |
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First day of the third quarter of fiscal year 2012 through and including the
last day of the second quarter of fiscal year 2013 |
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3.00 to 1.00 |
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Thereafter |
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2.75 to 1.00 |
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The
foregoing summary is qualified in its entirety by reference to
Amendment No. 1, a copy of which will be filed with a
subsequently filed periodic report on Form 10-K or Form 10-Q. A copy of the press release
announcing the amendment of the senior credit facility is filed herewith as Exhibit 99.2.
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Section 2 — Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets.
On February 10, 2011, GEO completed its previously announced acquisition of B.I. Incorporated
(“BI”), a Colorado corporation, pursuant to an Agreement and Plan of Merger, dated as of December
21, 2010 (the “Merger Agreement”), with BII Holding Corporation, a Delaware corporation (“BII
Holding”) which owns BI, GEO Acquisition IV, Inc., a Delaware corporation and wholly-owned
subsidiary of GEO (“Merger Sub”), BII Investors IF LP, in its capacity as the stockholders’
representative, and AEA Investors 2006 Fund L.P. Under the terms of the Merger Agreement, Merger
Sub merged with and into BII Holding (the “Merger”), with BII Holding emerging as the surviving
corporation of the merger.
As a result of the Merger, GEO paid merger consideration of $415.0 million in cash excluding
transaction related expenses and subject to certain adjustments. Under the Merger Agreement, $12.5
million of the merger consideration was placed in an escrow account for a one-year period to
satisfy any applicable indemnification claims pursuant to the terms of the Merger Agreement by GEO,
the Merger Sub or its affiliates.
As discussed above, GEO financed the cash consideration through net proceeds from its offering
of 2021 Notes together with borrowings of $150.0 million under GEO’s senior credit facility. Any
remaining net proceeds from the offering of the 2021 Notes may be used to repay amounts
outstanding under GEO’s revolving credit facility.
The foregoing description of the Merger Agreement and Merger is not complete and is qualified
in its entirety by reference to the Merger Agreement, which was attached as Exhibit 2.1 to GEO’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on December 28, 2010
and is incorporated herein by reference.
A copy of GEO’s press release dated February 11, 2011 announcing the completion of the
acquisition of B.I. is attached hereto as Exhibit 99.3.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 under the caption “Offering of 2021 Notes” and “Credit
Agreement Amendment” is incorporated by reference.
Section 9 — Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
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(d) Exhibits
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| Exhibit No. |
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Description |
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4.1 |
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Indenture, dated as of February 10, 2011, by and among GEO, the Guarantors party
thereto, and Wells Fargo Bank, National Association as Trustee relating to the 6
5/8% Senior Notes due 2021. |
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10.1 |
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Registration Rights Agreement, dated as of February 10, 2011, by and among GEO,
the Guarantors party thereto, and Wells Fargo Securities, LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., J.P. Morgan Securities
LLC and SunTrust Robinson Humphrey, Inc. as representatives of the Initial
Purchasers. |
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99.1 |
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Press release, dated February 11, 2011, relating to the issuance of the 2021 Notes. |
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99.2 |
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Press release, dated February 11, 2011, relating to the amendment of the senior
credit facility. |
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99.3 |
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Press release, dated February 11, 2011, relating to the completion of the
acquisition of B.I. Incorporated. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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THE GEO GROUP, INC.
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| February 16, 2011 |
/s/ Brian R. Evans
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Brian R. Evans |
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Senior Vice President and Chief Financial Officer
(Principal Financial Officer) |
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EXHIBIT INDEX
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| Exhibit No. |
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Description |
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4.1 |
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Indenture, dated as of February 10, 2011, by and among GEO, the Guarantors party
thereto, and Wells Fargo Bank, National Association as Trustee relating to the 6
5/8% Senior Notes due 2021. |
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10.1 |
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Registration Rights Agreement, dated as of February 10, 2011, by and among GEO,
the Guarantors party thereto, and Wells Fargo Securities, LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., J.P. Morgan Securities
LLC and SunTrust Robinson Humphrey, Inc. as representatives of the Initial
Purchasers. |
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99.1 |
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Press release, dated February 11, 2011, relating to the issuance of the 2021 Notes. |
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99.2 |
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Press release, dated February 11, 2011, relating to the amendment of the senior
credit facility. |
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99.3 |
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Press release, dated February 11, 2011, relating to the completion of the
acquisition of B.I. Incorporated. |
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