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August 16, 2005
GEO Buys Private Prison System
Tuesday, August 16, 2005
Boca firm buys private prison system
Published Monday, August 15, 2005 1:00 amby By Corey Siggins
Boca Raton-based GEO Group is in the process of placing another privatized correctional facility under its ownership.
GEO, a company that specializes in operating prisons and mental health facilities across the world, recently signed an agreement to acquire Correctional Services Corporation (CSC) in Sarasota for $62 million.
Under the terms of the agreement, GEO will obtain contracts and awards held by CSC for the operation of 15 adult correctional facilities with a total capacity of 7,500 beds. The company will also pay $6 a share and assume approximately $124 million in CSC debt.
According to Pablo Paez, GEO¹s director of corporate relations, CSC also runs 17 juvenile correctional facilities with a total capacity of 1,300 beds through its subsidiary, Youth Services International Inc. Because the juvenile facilities are outside GEO¹s core business focus, the company is negotiating to sell the facilities back to CSC. Alternative buyers may be sought if an agreement with CSC cannot be reached.
The deal between GEO and CSC, subject to the approval of CSC shareholders, federal regulatory agencies and other conditions, is expected to officially close at the beginning of the fourth quarter this year.
³As a company, we have concentrated on acquiring the type of facilities that enhance our productivity and strength. It¹s the type of business we know well,² Paez said. ³Integrating CSC into our ranks will only bolster the standing we have in this industry.²
Originally begun as a division of the Wackenhut Corporation in 1984, GEO broke free and became an independent company in 2003.
In Florida, the company operates correctional facilities in Deerfield Beach, Moore Haven and South Bay, as well as Atlantic Shores Hospital in Fort Lauderdale and South Florida State Hospital in Pembroke Pines.
Acquiring CSC will bring the total number of facilities under GEO to approximately 55,
with a total capacity of 43,500 beds.
³This acquisition is an excellent strategic fit for our company that will have a positive impact on our financial performance and will increase our ability to pursue new business opportunities,² said George C. Zoley, chairman and chief executive officer of GEO. ³We are also excited about the community correctional services offered by CSC, which will broaden our service offerings and expand our relationships with existing clients.²
GEO earned between $148 million and $154 million in revenue for the second quarter ending June 31. Company officials forecast third quarter revenues to be between $140 million and $147 million.
Corey Siggins can be reached at 561-893-6441 or at csiggins@bocanews.com.
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Posted by lois at August 16, 2005 12:34 PM