GEO CORP 5.125% Apr01 2023 senior notes

Major debt maturity schedule

2021: total 22,186

2022: total 19283

2023: 5.125% senior notes 278,783, total 297,481

2024: term B load 746,000

          revolver credit 631,605

          5.875% senior notes 225293 

          total 1,614,172

source: Link page 15

Corporate fundamental

FCF (in thousands)

2020 = 441,733 - 104174 = 337,559

2019 = 338143 - 104137 = 243,006

2018 =  274475 - 188483 = 85,992

2017 = -119,213

2016 = -105,722

AFFO

2021 Q1: 72,246

公司逐漸強化現金流

整體破產評估

Altman-Z-Score: 0.87 (https://www.gurufocus.com/term/zscore/NYSE:GEO/Altman-Z-Score/The-GEO-Group)

有破產危險!

Events

1. 公司停發股利, 保留現金還債 (Link)

           On April 7, 2021, we announced that GEO’s Board of Directors (the “Board”) immediately suspended our quarterly dividend payments with the goal of maximizing the use of cash flows to repay debt, deleverage, and internally fund growth. 

2. 賣出資產, 取回13.2M back (page 17 of Link)
3. 發行2026 senior notes贖回2022 senior notes (Link)

           The Company and GEOCH intend to use the net proceeds of the offering to fund the repurchase, redemption or other discharge of GEO’s existing 5.875% senior notes due 2022, to pay related transaction fees and expenses, and for general corporate purposes.

感想與後續追蹤

1. 2024 senior notes的YTM是14.633%, 2023 senior notes則是10.861%. 考量2024需要大量還債, 卻只差4%, 似乎不太對稱.
2. 2023 senior notes的總報酬是20%, 若default的結果是歸0, 則破產機率要大於20%. 依照持續改善的現金流, 要償還2023 senior notes並非難事, 有值博率.
3. 後續須關注的地方
• 外在營運條件是否有重大改變, eg: 政府政策, COVID-19...etc
• 營運現金流是否持續充沛?

==============

2021.06.01

https://seekingalpha.com/news/3699978-geo-group-stock-falls-after-sp-downgrades-credit-rating-further-into-junk

S&P downgrade GEO bond to junk level. Short term sell off by funds is unavoidable. But this makes it more attractive.

They must have plans for debt on 2024. I wonder whether their plan will involve 2023 notes or not.