Under Fire From Biden, Prison Operators Rush Against Cash Crunch – Bloomberg


Photographer: Oliver Contreras/Sipa/Bloomberg

Private prison operators are rushing to shore up their finances after increasing political pressure regarding their treatment of inmates and immigrants cast doubts over the long-term prospects of their businesses.

CoreCivic Inc. is borrowing $400 million to refinance near-term debt, while Geo Group Inc. said it would suspend its quarterly dividend to prioritize debt repayment and begin a review of its corporate structure, according to separate statements Wednesday.

The companies, the two largest operators of private detention facilities in the U.S., are contending with the fallout from an executive order from President Joe Biden in January that instructed the Department of Justice not to renew contracts with private prison operators. They have also faced dwindling financing options after major banks announced they would no longer lend to the industry and suffered credit rating downgrades.

In spite of those challenges, new allies have recently emerged on Wall Street. Imperial Capital Group Inc. stepped in to lead CoreCivic’s bond offering Wednesday, which is the company’s first since 2017, while StoneX Group Inc. helped Geo arrange a convertible bond sale in February. The firm is also a joint bookrunner on CoreCivic’s new bond deal.

Representatives for CoreCivic and Imperial Capital did not respond to requests for comment. A representative for Geo declined to comment beyond the company’s statement on Wednesday, in which it said it aims to direct cash flows to repay debt and fund growth internally.

Higher Borrowing Costs



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