The GEO Group’s debt moved up after a federal appeals court ruled on Tuesday that a California state law that would weed out private detention facilities cannot be enforced because it conflicts with the federal government’s authority over immigration.
The 2-1 decision from the 9th U.S. Circuit Court of Appeals overturned a District Court ruling that upheld the 2019 California legislation, known as AB 32.
The prison operator also announced on 1 October that it entered into a new five-year contract with Clearfield County, Pennsylvania, to utilize the 1,876-bed Moshannon Valley Facility in Decatur Township, Pennsylvania to house ICE-related detainees.
The borrower’s earnings outlook has been murky, as the Biden administration takes steps to end the federal government’s partnership with private prisons. A presidential executive order issued in January 2021 directed the US Department of Justice not to renew contracts with private prison operators as part of an effort to end the federal government’s partnership with them.
GEO Group’s USD 230m 6.5% convertible notes due 2026 traded yesterday at 105.607 to yield 5.055%, compared to trades at 103.685 to yield 5.543% on 29 September, according to MarketAxess.
Its USD 350m 6% senior unsecured notes due 2026 traded yesterday at 81.625 to yield 11.3%, compared to trades at 80 to yield 11.83% on 1 October.
The USD 792m Libor+200bps term loan due 2024 is quoted today at 92.464/93.625, compared to quotes at 92.077/93.316 yesterday, according to Markit.
The company’s stock traded today at USD 7.75 per share for a market cap of USD 948.57m, up 4.45% from Monday’s close.