September 2023
For decades, banks and other financial institutions have extended multiple loans and other credit agreements to CoreCivic and GEO Group—the world's largest private prison companies—which have used this money to finance their growth. In the wake of multiple large banks announcing that they would no longer finance the two companies, much less information is available about these banks' current involvement—and the same banks that were named before might still be involved.
The only financial institution that is definitely still financing the two companies is Alter Domus, a privately held, New York–based investment management firm, which serves as the administrative agent of both companies' credit agreements. As before, other banks are involved as part of a lending syndicate; however, unlike before, the names of the other banks have been publicly disclosed.
Loans were historically crucial for CoreCivic and GEO Group while they were incorporated as Real Estate Investment Trusts (REITs): companies that own or finance income-generating real estate. As REITs, the companies were exempt from paying corporate income tax; however, their REIT status required them to pay out 90% of their profit as dividends to their shareholders. The two companies therefore relied on loans to finance their growth and expansion within the criminal punishment system.
Between 2005 and 2016, for example, GEO Group acquired nine smaller companies that either manage prisons or provide e-carceration technologies for "community corrections." GEO Group had to borrow $2 billion to fund eight of these nine acquisitions. Similarly, between 2013 and 2016, CoreCivic borrowed $193 million to acquire three smaller companies that managed "residential reentry centers."
Between 2018 and 2020, public outrage grew over the Trump administration's anti-immigration policies, specifically family separation and the jailing of immigrant children and their families—largely facilitated by CoreCivic and GEO Group. Information published in 2019 by In the Public Interest and the Center for Popular Democracy named 14 banks, including the largest U.S. banks, as financiers of these two companies: Bank of America, Barclays, BNP Paribas, Citizens Bank, Fifth Third Bank, First Horizon Bank (formerly First Tennessee Bank), HSBC, JPMorgan Chase, Pinnacle Bank, PNC Bank, Regions Bank, Truist Bank (formerly SunTrust Bank), U.S. Bank, and Wells Fargo. These banks, along with Avondale Partners, Canaccord Genuity, FTN Financial, Macquarie Capital, the Royal Bank of Scotland (RBS), and TD Bank, were also named as bond underwriters of CoreCivic and/or GEO Group bond offerings.
Together, these financiers operated as loan syndicates, with one lead bank operating as the administrative agent of the companies' credit agreements. The credit they have extended to CoreCivic and GEO Group includes:
- Term loans: loans for fixed amounts of money with specific repayment schedules.
- Revolving lines of credit or "revolvers": a more flexible type of loan that allows a company to draw, repay, and redraw multiple times, up to a certain amount, at any time throughout the duration of the agreement.
- Corporate bonds: debt notes that companies issue and sell to investors, which hold them as part of their investment portfolio. In this case, the bank serves not as the lender itself, but as an underwriter, facilitating the issuance and sale of the bonds (although, as investors, many banks also buy bonds as part of their investment portfolios).
In early March 2019, following sustained campaigns targeting these banks, JPMorgan Chase announced that it would not extend new loans to CoreCivic and GEO Group. Eight additional banks made similar declarations by the end of that year: Bank of America, Barclays, BNP Paribas, Fifth Third Bank, PNC Bank, Truist Bank, U.S. Bank, and Wells Fargo. Regions Bank followed suit in 2021, following a wave of public outrage over the police killing of George Floyd.
As a result of the banks' announcements that they would stop financing CoreCivic and GEO Group, both companies sought new credit agreements with other financial institutions, including private lenders and non-U.S. banks, which are less susceptible to public pressure.
In December 2019, CoreCivic reported to the U.S. Securities and Exchange Commission (SEC) that it had entered into a new credit agreement with Nomura Holdings, part of Japan's largest investment bank. The disclosure, which named Nomura as the administrative agent, did not name any other lenders involved in the credit agreement.
Both CoreCivic and GEO Group gave up their REIT status and reorganized as taxable corporations in January 2021, making them much less reliant on loans for their operations. However, both companies are still debt-burdened. At the end of 2022, CoreCivic had $1.26 billion in debt and GEO Group had $2 billion.
CoreCivic paid off its debt to Nomura Holdings in full in May 2022, two years ahead of schedule, and entered into a new credit agreement, replacing Citizens Bank with Alter Domus as the administrative agent. Three months later, GEO Group similarly entered into a new credit agreement, replacing BNP Paribas with Alter Domus as the administrative agent.
Unlike in previous years, these 2022 SEC disclosures only named Alter Domus as the administrative agent of the credit agreements. While other lenders are also involved, they were not named. Therefore, some of the banks that were part of the old credit agreements might still be involved today.