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(Bloomberg) -- CoreCivic Inc., one of the largest operators of private detention facilities in the U.S., raised $225 million in the junk-bond market to refinance debt that’s due to be repaid as soon as 2023, according to a news release Wednesday.
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The private prison industry has been facing dwindling financing options in recent years after major banks announced they would no longer lend to the industry, as well as credit rating downgrades and increased environmental, social and governance concerns from investors.
In April, the company sold $450 million of bonds to refinance near-term debt in what was its first deal since 2017. Those notes, which pay interest of 8.25%, will be increased by $225 million to constitute a single class of securities. Wednesday’s “tack-on” bonds priced at 102.25% of their of their aggregate principal amount -- tighter than the level initially discussed -- with an effective yield-to-maturity of 7.65%, CoreCivic said in the release. The offering was also boosted from an original target of $100 million.
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Imperial Capital Group Inc., which managed the company’s bond sale earlier this year, led the new deal. StoneX Financial Inc. acted as joint lead arranger, and Wedbush Securities Inc. acted as co-manager for the offering.
The company’s existing 8.25% bonds due 2026 had rallied to about 104.75 cents on the dollar, according to Trace pricing data. Proceeds from the new add-on are earmarked for general corporate purposes, which may include purchasing CoreCivic’s existing $174 million of 4.625% senior notes due 2023 and $250 million of 4.75% senior notes due 2027 in the open market or in privately negotiated transactions. It may also repay some of its revolving credit facility and term loans.
(Updates with pricing information in the first and third paragraphs.)
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