BRENTWOOD, Tenn., Aug. 05, 2020 (GLOBE NEWSWIRE) — CoreCivic, Inc. (NYSE: CXW) (the Company) today announced that its Board of Directors has unanimously approved a plan to revoke its Real Estate Investment Trust (REIT) election and become a taxable C corporation, effective January 1, 2021 The decision is the result of an evaluation of the alternative capital structure and allocation companies announced on June 17, 2020.
In addition, the Board of Directors voted unanimously to end the company’s quarterly dividend and to allocate the company’s significant free cash flow to debt reduction as a priority, with a ratio of target total leverage of 2.25x to 2.75x, excluding project-specific non-recourse debt. Consistent with our first debt reduction priority, we plan to allocate a substantial portion of our free cash flow to returning capital to shareholders, which may include share buybacks and future dividend payments. We will also pursue exciting growth opportunities, including new development opportunities in our Properties segment to address the need to modernize outdated correctional infrastructure across the country, focus our efforts on optimizing capacity utilization by existing beds in our Security segment and evaluate other opportunities to provide services. in our community segment that were not available under the FPI structure. We also intend to capitalize on opportunities to increase our investments in programs and services that expand the leadership role we play in addressing the most pressing issues facing America’s criminal justice system. Beyond the operating cash flow we generate from our businesses, we also expect to assess the sale of up to $150 million in net proceeds of low-yielding non-core real estate assets in our Properties segment, which would enable us to accelerate the implementation of our revised capital allocation strategy.
“CoreCivic will have greater flexibility to allocate our substantial free cash flow in a way that best serves the interests of our shareholders, our business, our government partners, and the people and communities we serve together.” , said Damon T. Hininger, CoreCivic. President and CEO. “We believe that our revised structure and strategy, combined with a resilient core business, will result in significantly greater liquidity, a stronger balance sheet and a lower cost of capital, which will allow us to reduce our dependence on equity markets. capital. Every day, our people work tirelessly to implement programs that change the lives of those entrusted to us. We are excited by the opportunity to create value for our shareholders while developing even more ways that help the people we care for succeed in the next stage of their lives.
The Company will continue to operate as a REIT for the remainder of the 2020 taxation year, and existing REIT requirements and limitations, including those established by the Company’s organizational documents, will remain in place until January 1, 2021.
CoreCivic has engaged Moelis & Company as financial advisor and Bass, Berry & Sims PLC and Latham & Watkins, LLP as legal advisors to assist in the process.
The company is a diversified government solutions company with the scale and experience to solve tough government challenges in a flexible and cost-effective way. We provide a wide range of solutions to government partners who serve the public good through the management of corrections and detention, a growing network of residential rehabilitation centers to help solve the crisis of recidivism in the United States and government real estate solutions. We are a publicly traded REIT and the nation’s largest owner of partnership-based correctional, custodial and residential rehabilitation facilities. We also believe we are the largest private owner of real estate used by US government agencies. The Society has been a flexible and reliable partner for the government for more than 35 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government improve the public good. Learn more about http://www.corecivic.com/.
This press release contains statements about our beliefs and expectations regarding the outcome of future events that are “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These include, but are not limited to, the risks and uncertainties associated with: (i) whether the revocation of our REIT selection and our revised capital allocation strategy can be implemented in a cost-effective manner which provides the expected benefits, including the facilitation of our planned debt reduction initiative and planned return of capital to shareholders; (ii) our ability to identify and complete the sale of certain non-core assets at attractive prices; (iii) the duration of the federal government’s denial of entry at the United States southern border to asylum seekers and anyone crossing the southern border without proper documentation or authority in an effort to contain the spread of COVID- 19; (iv) government and staff responses to staff or residents who test positive for COVID-19 in public and private correctional, custodial and rehabilitation facilities, including facilities we operate; (v) the location and duration of shelter-in-place orders and other restrictions associated with COVID-19 that disrupt the criminal justice system, as well as government prosecution policies and legal restrictions orders that affect the number of people placed in correctional, custodial, and re-entry facilities; (vi) general economic and market conditions, including, but not limited to, the impact government budgets may have on our contract renewals and renegotiations, daily rates and occupancy; (vii) fluctuations in our results of operations due to, among other things, changes in occupancy levels, competition, renegotiations or terminations of contracts, increases in operating costs, fluctuations in interests and operating risks; (viii) our ability to obtain and maintain contracts to operate correctional facilities, detention and rehabilitation for reasons such as, but not limited to, sufficient government appropriations, contract compliance, negative publicity and the effects of inmate disturbances; (ix) changes in the privatization of corrections and custody, the acceptance of our services, the timing of the opening of new facilities and the commencement of new management contracts (including the extent and pace at which new contracts are used), as well as our ability to use available beds; (x) changes in government policy, legislation and regulations that affect the use of the private sector for corrections, detention and residential rehabilitation services, generally, or our business, specifically, including, but not limited thereto, the continued use of the South Texas Family Residential Center by U.S. Immigration and Customs Enforcement, under the terms of the current contract, and the impact of any changes to immigration and customs reform. sentencing laws (our company does not, under a long-standing policy, lobby for or against policies or legislation that would determine the basis or length of an individual’s incarceration or detention .); (xi) our ability to successfully identify and exploit future development and acquisition opportunities and our ability to successfully integrate the transactions of completed acquisitions and realize the projected returns therefrom; (xii) our ability, following the revocation of our REIT selection, to identify and initiate service opportunities that were not available within the REIT structure; (xiii) our ability to satisfy and maintain tax eligibility as a REIT for the years the Company has elected REIT status; and (xiv) the availability of debt and equity financing on terms favorable to us, or not at all. Other factors that could cause results of operations to differ from financial results are described in our filings from time to time with the Securities and Exchange Commission.
The Company assumes no responsibility for updating the information contained in this press release after the date hereof to reflect events or circumstances occurring after the date hereof or the occurrence of unforeseen events or for any changes or modification to this press release or the information contained herein. by third parties, including but not limited to any wired or internet service.
|Contact:||Investors: Cameron Hopewell – Managing Director, Investor Relations – (615) 263-3024
Media: Steve Owen, Vice President, Communications – (615) 263-3107