Item 1.01 Entry into a Material Definitive Agreement.
On August 5, 2020, CoreCivic, Inc., a Maryland corporation (the "Company"),
entered into (i) a First Amendment to Term Loan Agreement, modifying that
certain Term Loan Credit Agreement dated as of December 18, 2019, by and among
the Company, as Borrower, certain lenders party thereto from time to time, and
the Administrative Agent thereunder (the "Term B Credit Agreement") and (ii) a
First Amendment to Second Amended and Restated Credit Agreement, modifying that
certain Second Amended and Restated Credit Agreement dated as of April 17, 2018,
by and among the Company, as Borrower, certain lenders party thereto from time
to time, and the Administrative Agent thereunder (the "Revolving Credit
Agreement"; and together with the Term B Credit Agreement, the "Credit
Agreements"). The foregoing amendments amended the representations, warranties
and covenants of the Credit Agreements to permit the Company to elect not to be
taxed as a Real Estate Investment Trust ("REIT").
The amendments also provide that following the revocation of the Company's REIT
election (as discussed in Item 8.01 below), the Company will continue to be able
to make restricted payments (including cash dividends, share repurchases and
investments in unrestricted subsidiaries), subject to certain conditions and
limitations, in an amount equal to the greater of (i) $50,000,000 during any
period of four consecutive fiscal quarters, and (ii) the greatest amount of
restricted payments that, after giving pro forma effect thereto, would not cause
the four quarter consolidated secured leverage ratio to exceed 1.50 to 1.00.
The foregoing summary of the amendments to the Term B Credit Agreement and the
Revolving Credit Agreement does not purport to be complete and is qualified in
its entirety by reference to the amendments to the Term B Credit Agreement and
the Revolving Credit Agreement, copies of which are filed as Exhibits 10.1 and
10.2, respectively, to this Current Report on Form 8-K ("Current Report") and
are incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
On August 5, 2020, the Company issued a press release announcing its 2020 second
quarter financial results. A copy of the release is furnished as part of this
Current Report as Exhibit 99.1 and is incorporated herein by reference. The
release contains certain financial information calculated and presented on the
basis of methodologies other than in accordance with generally accepted
accounting principles ("GAAP"), which the Company believes is useful to
investors and other interested parties. The Company has included information
concerning this non-GAAP information in the release, including a reconciliation
of such information to the most comparable GAAP measures, the reasons why the
Company believes such information is useful, and the Company's use of such
information for additional purposes.
The information under this Item 2.02, including Exhibit 99.1 attached to this
Current Report, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that section and shall not be deemed incorporated
by reference in any filing made by the Company under the Securities Act of 1933,
as amended, or the Exchange Act, except as set forth by specific reference
herein or in such filing.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is incorporated by reference
into this Item 2.03.
Item 8.01 Other Events.
On August 5, 2020, the Company issued a press release announcing that its Board
of Directors (the "Board") unanimously approved a plan to revoke its REIT
election and become a taxable C corporation, effective January 1, 2021. The
Company will continue to operate as a REIT for the remainder of the 2020 tax
year, and existing REIT requirements and limitations, including those
established by the Company's organizational documents, will remain in place
until January 1, 2021. The press release also announced that the Board has
unanimously determined to discontinue the Company's quarterly dividend and will
prioritize allocating the Company's free cash flow to debt reduction. The
Company's press release dated August 5, 2020, is filed herewith as Exhibit 99.2,
and is incorporated herein by reference.
Cautionary Note Regarding Forward-Looking Statements
This Current Report contains statements as to the Company's beliefs and
expectations of the outcome of future events that are "forward-looking"
statements within the meaning of Section 21E of the Exchange Act 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 revoking the Company's REIT
election and the Company's revised capital allocation strategy can be
implemented in a cost effective manner that provides the expected benefits,
including facilitating the Company's planned debt reduction initiative and
planned return of capital to shareholders; (ii) the Company's ability to
identify and consummate the sale of certain non-core assets at attractive
prices; (iii) the
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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
the novel coronavirus ("COVID-19"); (iv) government and staff responses to staff
or residents testing positive for COVID-19 within public and private
correctional, detention and reentry facilities, including the facilities the
Company operates; (v) the location and duration of shelter in place orders and
other restrictions associated with COVID-19 that disrupt the criminal justice
system, along with government policies on prosecutions and newly ordered legal
restrictions that affect the number of people placed in correctional, detention,
and reentry facilities; (vi) general economic and market conditions, including,
but not limited to, the impact governmental budgets can have on the Company's
contract renewals and renegotiations, per diem rates, and occupancy;
(vii) fluctuations in the Company's operating results because of, among other
things, changes in occupancy levels, competition, contract renegotiations or
terminations, increases in costs of operations, fluctuations in interest rates
and risks of operations; (viii) the Company's ability to obtain and maintain
correctional, detention, and residential reentry facility management contracts
because of reasons including, but not limited to, sufficient governmental
appropriations, contract compliance, negative publicity and effects of inmate
disturbances; (ix) changes in the privatization of the corrections and detention
industry, the acceptance of the Company's 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 utilized), as well as the Company's
ability to utilize available beds; (x) changes in government policy, legislation
and regulations that affect utilization of the private sector for corrections,
detention, and residential reentry services, in general, or the Company's
business, in particular, including, but not limited to, the continued
utilization of the South Texas Family Residential Center by United States
Immigration and Customs Enforcement under terms of the current contract, and the
impact of any changes to immigration reform and sentencing laws (the Company
does not, under longstanding policy, lobby for or against policies or
legislation that would determine the basis for, or duration of, an individual's
incarceration or detention.); (xi) the Company's ability to successfully
identify and consummate future development and acquisition opportunities and the
Company's ability to successfully integrate the operations of completed
acquisitions and realize projected returns resulting therefrom; (xii) the
Company's ability, following the revocation of its REIT election, to identify
and initiate service opportunities that were unavailable under the REIT
structure ; (xiii) the Company's ability to meet and maintain qualification for
taxation as a REIT for the years the Company elected REIT status; and (xiv) the
availability of debt and equity financing on terms that are favorable to the
Company, or at all. Other factors that could cause operating and financial
results to differ are described in the filings the Company makes from time to
time with the Securities and Exchange Commission.
The Company takes no responsibility for updating the information contained in
this Current Report following the date hereof to reflect events or circumstances
occurring after the date hereof or the occurrence of unanticipated events or for
any changes or modifications made to this Current Report or the information
contained herein by any third-parties, including, but not limited to, any wire
or internet services.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1 First Amendment to Term Loan Credit Agreement, dated August 5, 2020, to
the Term Loan Credit Agreement, dated as of December 18, 2019
10.2 First Amendment to Second Amended and Restated Credit Agreement, dated
August 5, 2020, to the Second Amended and Restated Credit Agreement, dated
as of April 17, 2018
99.1 Press Release dated August 5, 2020
99.2 Press Release dated August 5, 2020
104 Cover Page Interactive Data File (the cover page XBRL tags are imbedded in
the Inline XBRL document)
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