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Subsequent Events | 6 Months Ended
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Jun. 30, 2022
Subsequent Events [Abstract] |
Subsequent Events | 15. SUBSEQUENT EVENTS Transaction Support Agreement As previously reported, beginning in November 2021, the Company commenced discussions with (i) certain members of an ad hoc group of holders (the “Noteholder Group”) of the Company’s 5.125% Senior Notes due 2023 (the “2023 Notes”), 5.875% Senior Notes due 2024 (the “2024 Notes”), and 6.00% Senior Notes due 2026 (the “2026 Notes,” and together with the 2023 Notes and the 2024 Notes, the “Senior Notes”), (ii) certain members of an ad hoc group of term lenders (the “Term Lender Group”) under the Company’s Third Amended and Restated Credit Agreement, dated as of March 23, 2017 (as subsequently amended, the “Existing Credit Agreement” and the term loans made thereunder, the “Term Loans”), and (iii) the administrative agent (the “Agent”) and certain lenders that have provided revolving credit loans and commitments (the “Revolving Credit Loans” and “Revolving Credit Commitments”) under the Existing Credit Agreement (such lenders, the “RCF Lenders”) concerning a potential refinancing, exchange, recapitalization, or other transaction or series of transactions to reduce the Company’s funded recourse debt and address its nearer term maturities (the “Transaction Discussions”). The Company undertook these discussions on a confidential basis pursuant to non-disclosure agreements with the applicable members of the Noteholder Group and the Term Lender Group, and, in the case of the Agent and the RCF Lenders, the confidentiality provisions of the Existing Credit Agreement. On July 18, 2022, the Company entered into a transaction support agreement (together with all exhibits, annexes and schedules thereto, the “Transaction Support Agreement”) with certain consenting holders of the Senior Notes (the “Consenting Noteholders”), certain consenting Term Lenders (the “Consenting Term Lenders”), the Agent, and certain consenting RCF Lenders (the “Consenting RCF Lenders” and, together with the Consenting Noteholders and the Consenting Term Lenders, the “Consenting Creditors”) setting forth principal terms for a comprehensive transaction (the “Transaction”) to address the upcoming maturities of the Company’s outstanding debt in 2023, 2024, and 2026. The Transaction Support Agreement contemplates, among other things, the following:
| • |  | Amending the Existing Credit Agreement to permit the indebtedness and liens contemplated to be incurred under the Exchange Credit Agreement (defined below), the New Notes (defined below) and the 2028 Private Exchange Notes (defined below), among other modifications (the “Existing Credit Agreement Amendment”);
| • |  | Exchanging approximately 81% of the aggregate principal amount of Revolving Credit Commitments and the Term Loans outstanding under GEO’s Existing Credit Agreement for a combination of cash and new commitments and loans under a new credit agreement (the “Exchange Credit Agreement”) with a three-year maturity extension to March 2027 (the “RCF Transaction” and the “Term Loan Transaction,” respectively);
| • |  | With respect to certain Consenting RCF Lenders who opt out of extending the maturity of their Revolving Credit Loans and Revolving Credit Commitments, the assignment of an agreed portion of such Revolving Credit Loans and Revolving Credit Commitments to certain other Consenting Creditors, with such other Consenting Creditors subsequently exchanging the Revolving Credit Loans thereby acquired for term loans under the Exchange Credit Agreement (the “Non-Extending RCF Lender Transaction,” and, together with the Existing Credit Agreement Amendment, the RCF Transaction, and the Term Loan Transaction, the “Credit Facility Transaction”);
| • |  | Commencing the Exchange Offers (defined below) and Consent Solicitations (defined below) for any and all 2023 Notes and 2024 Notes; and
| • |  | Exchanging approximately $239 million of 2026 Notes held by Consenting 2026 Noteholders as of July 18, 2022, for newly issued 9.500% Senior Second Lien Secured Notes maturing on December 31, 2028 (the “Private Exchange” and the “2028 Private Exchange Notes”) and amending certain provisions of the indenture for the 2026 Senior Notes (the “2026 Indenture Proposed Amendments”).
The Transaction Support Agreement sets forth the commitments of the Company and the Consenting Creditors (collectively, the “Parties”) to, among other things, cooperate in good faith to negotiate the definitive documents necessary or advisable to effect the Transaction, use their commercially reasonable efforts to consummate the Transaction in accordance with such definitive documents, and refrain from taking any actions that would impede or would otherwise be inconsistent with the Transaction (including by supporting or consenting to any alternative transaction). The Parties’ obligations to consummate the Transaction are subject to customary conditions, including, without limitation, that the Parties have complied in all material respects with their respective covenants and agreements contained in the Transaction Support Agreement and that the Company has paid specified fees and expenses incurred by the Consenting Creditors in connection with the Transaction. The Transaction Support Agreement may be terminated upon the occurrence of specified events, including, without limitation, the occurrence of a material, uncured breach of any Party’s representations, warranties, covenants, or obligations under the Transaction Support Agreement, the Company’s failure to commence and complete the Exchange Offers and the Consent Solicitations within the timeframes specified in the Transaction Support Agreement, or upon the 100 th day following the execution of the Transaction Support Agreement (as may be extended in accordance with the terms of the Transaction Support Agreement). In addition, the Company may terminate the Transaction Support Agreement if the Company’s board of directors determines, upon the advice of counsel, that the Company’s continued performance under the Transaction Support Agreement would be inconsistent with the fiduciary duties of the Company’s directors. Although the Company intends to pursue the Transaction in accordance with the terms set forth in the Transaction Support Agreement, there can be no assurance that the Company will be successful in completing the Transaction or any other similar transaction on the terms set forth in the Transaction Support Agreement, on different terms, or at all. Exchange Offers and the Consent Solicitations On July 19, 2022, the Company issued a press release announcing that it commenced offers to exchange (the “Exchange Offers”) any and all of its outstanding 2023 Notes and 2024 Notes (collectively, the “Old Notes”) for newly issued 10.500% Senior Second Lien Secured Notes maturing on June 30, 2028 (the “New Notes”) and, if elected, cash, upon the terms and subject to the conditions set forth in the Registration Statement on Form S-4 (including a prospectus and consent solicitation statement forming a part thereof, the “Prospectus”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 19, 2022 (the “Registration Statement”) and press releases announcing the Transaction. In connection with the Exchange Offers, GEO is also soliciting consents to amend the indentures governing the Old Notes (the “Consent Solicitations”). Pursuant to the Exchange Offers and the Consent Solicitations, and subject to the terms and conditions set forth in the Prospectus, in exchange for each $1,000 principal amount of Old Notes validly tendered (and not validly withdrawn) or in the case of the 2023 Notes only, as payment for delivery of a Consent (as defined below) with respect to each $1,000 principal amount of 2023 Notes without a tender of the related 2023 Notes, in each case at any time at or prior to 5:00 p.m., New York City time, on August 16, 2022, unless extended or earlier terminated (such date and time as may be extended in accordance with the Prospectus, the “Expiration Time”) and accepted by the Company, participating holders will receive the consideration identified in the Prospectus (the “Exchange Consideration”). In conjunction with the Exchange Offers, the Company is conducting the Consent Solicitations to obtain consent from holders of each series of Old Notes (“Consents”) to certain proposed amendments to each indenture governing the Old Notes (the “Old Notes Indentures”) to, among other things, modify certain covenants and other provisions in the Old Notes Indentures as necessary or advisable to effect the Transaction (the “Proposed Amendments”). Holders of Old Notes that tender such Old Notes will be deemed to have given Consent to the Proposed Amendments with respect to the Old Notes. Holders of 2023 Notes may elect to either (i) tender their 2023 Notes and deliver the related Consent or (ii) deliver only their Consent (the “2023 Notes Consent”). Holders of 2024 Notes may only elect to tender their 2024 Notes together with delivery of the related Consent. Holders of Old Notes may not tender their Old Notes without delivering a Consent with respect to such Old Notes tendered, and holders of 2024 Notes may not deliver a Consent with respect to the 2024 Notes without tendering the related 2024 Notes. To adopt the Proposed Amendments related to a series of Old Notes, the Company must receive Consents from holders representing a majority of the outstanding principal amount of such series of Old Notes (the “Old Notes Requisite Consents”). If the Old Notes Requisite Consents are delivered with respect to any series of Old Notes, a supplemental indenture to the respective indenture, giving effect to the Proposed Amendments with respect to the applicable Old Notes, will be executed promptly following the receipt of the Old Notes Requisite Consents, but in no event prior to the Withdrawal Deadline (as defined in the Prospectus). The Company’s obligations to accept the Old Notes and Consents in the Exchange Offers and the Consent Solicitations are subject to the satisfaction or waiver of certain conditions described in the Prospectus, including receipt of (i) the Old Notes Requisite Consents for each series of Old Notes being tendered, (ii) the 2026 Notes Requisite Consents delivered in connection with the Private Exchange, and (iii) the Credit Agreement Exchange Requisite Consents delivered in connection with the Credit Agreement Exchange. Each of the Exchange Offers and Consent Solicitations is conditioned upon the consummation of the Private Exchange and the Credit Agreement Exchange and the effectiveness of the 2026 Indenture Proposed Amendments and the Existing Credit Agreement Proposed Amendments. The Private Exchange and the Credit Agreement Exchange are conditioned on, among other things, the 2026 Notes Supporting Holders and the Credit Agreement Supporting Holders, respectively, having satisfied their obligations in all material respects under the Transaction Support Agreement and the consummation of the Exchange Offers and Consent Solicitations. The completion of the Exchange Offers and the Consent Solicitations is subject to, and conditioned upon, the satisfaction or waiver of certain conditions, including, among other things, (i) the Registration Statement having been declared effective by the SEC on or prior to the Expiration Time and remaining effective on the Settlement Date (as defined by the Prospectus) (which condition cannot be waived) and (ii) the absence of any actual or threatened legal impediment to the acceptance for exchange of, or exchange of, the Old Notes. GEO will pay a soliciting broker fee equal to either (i) $2.50 for each $1,000 principal amount of Old Notes validly tendered for exchange and not validly withdrawn under the Exchange Offers or (ii) $0.50 for each $1,000 in principal amount of 2023 Notes for which only the Consent is provided in connection with the 2023 Notes Consent, in each case to soliciting retail brokers for holders holding less than $1,000,000 in aggregate principal amount of the Old Notes that are appropriately designated by their clients to receive this fee. The Exchange Offers and the Consent Solicitations are made only by and pursuant to the terms and subject to the conditions set forth in the Registration Statement, including the Prospectus. Retirement of Officer On July 18, 2022, David Venturella, Senior Vice President, Client Relations of The GEO Group, Inc. (“GEO” or the “Company”), announced his intention to retire effective February 1, 2023. Mr. Venturella joined GEO in 2012 and has served the Company in a number of positions, including as Executive Vice President, Corporate Development, Senior Vice President, Business Development and most recently Senior Vice President, Client Relations. Mr. Venturella will receive a monthly retirement payment with an approximate aggregate net present value of $335,000 pursuant to his participation in the Senior Officer Retirement Plan. The Company and Mr. Venturella intend to enter into a consulting agreement pursuant to which Mr. Venturella will serve as a consultant to GEO for a two-year period during which time his unvested performance-based shares will continue to vest according to their terms. Mr. Matthew T. Albence, 52, will succeed Mr. Venturella as Senior Vice President, Client Relations. Mr. Albence’s employment with GEO will commence on September 1, 2022. Mr. Albence will be working with Mr. Venturella until Mr. Venturella’s retirement to ensure a smooth transition. Updates to Senior Officer Compensation Effective July 1, 2022, following the approval of the Compensation Committee of the Company’s Board of Directors, the Company increased the target annual cash performance awards for its senior executives. Following this increase, the target annual cash performance award was set at 100% of the executive's annual base salary in the case of the Chief Executive Officer, 80% of the executive's annual base salary in the case of the Chief Financial Officer and 75% of the executive's annual base salary in the case of the remaining Senior Vice Presidents, with such awards to be paid in accordance with the terms of the plan governing the Company’s senior management cash performance awards. With the Compensation Committee’s approval, the Company also provided that such executives will be eligible to participate in the Company's long-term incentive program ("LTI"). The executives will have a target annual equity grant of 100% of the executive's annual base salary in the case of the Chief Executive Officer, 80% of the executive's annual base salary in the case of the Chief Financial Officer, and 75% of the executive's annual base salary in the case of the remaining Senior Vice Presidents, with the actual level of the executives' participation in the LTI to be determined by the Compensation Committee at its discretion, and with such awards to be paid in accordance with the terms of the LTI. Annual equity grant values in future years will be based on a variety of factors, including market data, individual performance, and scope of job responsibilities and may be more or less than the current target. The Compensation Committee approved these executive compensation changes following a market study by Pay Governance, the Compensation Committee’s executive pay consultant, to ensure that, with respect to the Company’s senior management, the Company is keeping pace with the currently highly competitive labor market environment for leadership talent.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6842918&loc=SL6314017-165662 + Details
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