GEO Group To Buy Eight Correctional And Detention Facilities From LCS

(RTTNews) - GEO Group Inc. (GEO) announced that it agreed to acquire eight correctional and detention facilities or the "LCS Facilities" totaling more than 6,500 beds from LCS Corrections Services, Inc., a privately-held owner and operator of correctional and detention facilities in the United States, and its affiliates . The LCS transaction will be an asset purchase.

As per the terms of the definitive agreement, GEO will acquire the LCS Facilities for approximately $312 million, or approximately $48,000 per bed, in an all cash transaction, excluding transaction related expenses.

Additionally, LCS has the opportunity to receive an additional payment if the Facilities exceed certain performance targets after the closing over a period of approximately 18 months. The aggregate amount of the purchase price to be paid at closing and the Earnout Payment, if achieved, will not exceed $350 million.

LCS will use the proceeds to repay approximately $302 million in outstanding net debt. GEO will not assume any debt as a result of the transaction.

GEO will finance the acquisition of the LCS Facilities with borrowings under its $700 million Revolving Credit Facility. Following the LCS transaction, GEO will have approximately $260 million in available borrowing capacity under its Revolving Credit Facility.

The transaction is expected to close by the end of February 2015, subject to the fulfillment of customary closing conditions.

On an annualized basis, the acquisition is expected to immediately increase GEO's revenues by approximately $75 million -$80 million and be initially $0.10-$0.12 accretive to Adjusted Funds from Operations per share, excluding one-time transaction-related expenses.

Additionally, GEO expects to achieve substantial improvements in the utilization of the LCS Facilities which is expected to create additional accretion to Adjusted Funds from Operations per share over the next 12-24 months.