The GEO Group Suspends Quarterly Dividend to Maximize Repayment of Debt While It Evaluates Corporate Structure
The GEO Group, Inc. (NYSE: GEO) (“GEO”) announced today that its Board of Directors (the “Board”) has immediately suspended GEO’s quarterly dividend payments with the goal of maximizing the use of cash flows to repay debt, deleverage, and internally fund growth. GEO currently intends to maintain its corporate tax structure as a Real Estate Investment Trust (“REIT”), but the Board has determined to undertake an evaluation of GEO's structure as a REIT.
The Board’s evaluation of the current corporate tax structure and GEO’s REIT status is expected to take into consideration, among other factors, potential changes to GEO’s financial operating performance, as well as, potential changes to the Internal Revenue Code of 1986, as amended (the "Code") applicable to U.S. corporations and REITs. The Board expects to conclude its evaluation in the fourth quarter of 2021, and should the Board determine not to change its current intent to maintain GEO’s REIT status, an additional dividend payment may be required before year-end in order to meet the minimum REIT distribution requirements under the Code.
As of March 31, 2021, GEO had $291 million in cash on hand and approximately $209 million in borrowing capacity available under GEO’s revolving credit facility, in addition to an accordion feature of $450 million under GEO’s senior credit facility. GEO has cancelled approximately $35 million in capital expenditures previously planned for 2021 and has set a goal of repaying a minimum of $125-$150 million in net debt during 2021.
About The GEO Group
The GEO Group (NYSE: GEO) is a fully integrated equity real estate investment trust specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO is a leading provider of enhanced in-custody rehabilitation, post-release support, electronic monitoring, and community-based programs. GEO’s worldwide operations include the ownership and/or management of 116 facilities totaling approximately 92,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 21,000 professionals.