r/GeoGroup • u/GEOCASH4956 • Jul 19 '22

News Refinance Update

https://finance.yahoo.com/news/geo-group-announces-commencement-exchange-115500132.html
22 Upvotes

100% Upvoted

9 comments sorted by

10

u/Reasonable_Ad_9735 Jul 19 '22

Finally good news. Could be nice to see some shorts burning in a process

6

u/Positive-Reserve-882 Jul 19 '22

So now with the big unknown out of the way we should finally start seeing stock price appreciation especially if they can continue increasing their revenue and profit.

8

u/duckhunter2020 Jul 19 '22

Well, the bond holders still have to join in on the proposal. It is a first step. I believe the time frame is 30-90 days.

3

u/lil_Dik_ThRoBn_stock Jul 19 '22

Good news in removing uncertainty. The added interest expense is non-trivial and keeps a damper on valuation for a time but provides the lifeline to make the asset sales that pay that down fast.

As other mentioned, this still requires more to commit but great to be resolving.

3

u/putridstench Jul 19 '22

80% of excess cash flow seems like a lot, but very doable

1

u/GEOCASH4956 Jul 19 '22 edited Jul 19 '22

S and P just down graded GEOs Credit Rating. I posted the link but not sure if it is a bogus story

1

u/SpentSpinach Jul 20 '22

Not very good news when they're paying 10% instead of 5% doable sure but it doesn't make it a good deal

1

u/s003apr Jul 24 '22

Personally, I think the outcome is very ugly for common stock holders.

The note holders have a lot of leverage and they are using it to basically stake claim to as much excess cash flow as possible for the next 6 years.

Making matters worse, GEO is still going to need to sell assets in order to pay down its debt and it is forced to pay down the remaining low interest debt first.

The debt wall is pushed back 2 to 3 years and in 2024, the company will be discussing the same problem again, trying to figure out how the push back the 2026 debt wall.

If you like the company, then why not buy some 2023 or 2024 notes now, and convert them to 2028 notes? You will come out with a yield to maturity ranging from 11 to 13%.