Corrections Corporation of America
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 21, 2007 (December 21, 2007)
Corrections Corporation of America
(Exact name of registrant as specified in its charter)
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001-16109
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62-1763875 |
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(Commission File Number)
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(I.R.S. Employer
Identification No.) |
10 Burton Hills Boulevard, Nashville, Tennessee 37215
(Address of principal executive offices) (Zip Code)
(615) 263-3000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
On December 21, 2007, Corrections Corporation of America (the “Company”) entered into a Credit
Agreement, by and among the Company, as Borrower, certain lenders and Bank of America, N.A., as
Administrative Agent for the lenders (the “New Revolving Credit Facility”). The New Revolving
Credit Facility effectively replaces the Company’s prior senior secured credit facility, and
includes the outstanding $34.9 million in letters of credit issued under the prior facility.
The material terms of the New Revolving Credit Facility are as follows:
Availability
The New Revolving Credit Facility is in the aggregate principal amount of $450.0 million, with
a $20.0 million sublimit for swingline loans and a $100.0 million sublimit for the issuance of
standby letters of credit, and has a five-year term. In addition, the Company has an option to
increase the availability under the New Revolving Credit Facility by up to $300.0 million subject
to, among other things, the receipt of commitments for the increased amount.
Collateral and Guarantees
The loans and other obligations under the New Revolving Credit Facility are guaranteed by each
of the Company’s domestic subsidiaries.
The Company’s obligations under the New Revolving Credit Facility and the guarantees are
secured by, among other things:
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all of the capital stock (or other ownership interests) of the Company’s domestic
subsidiaries and 65% of the capital stock (or other ownership interests) of the Company’s
“first-tier” foreign subsidiaries; |
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the accounts receivable of the Company and each of the Company’s domestic subsidiaries;
and |
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substantially all of the deposit accounts of the Company and its domestic subsidiaries. |
Interest and Fees
The Company’s borrowings under the New Revolving Credit Facility bear interest at rates that,
at the Company’s option, can be either:
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a base rate generally defined as the sum of (i) the higher of (x) the Administrative
Agent’s prime rate and (y) the daily federal funds effective rate plus one-half percent
(0.50%) per annum and (ii) an applicable margin. |
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a LIBOR rate generally defined as the sum of (i) the British Bankers Association LIBOR
Rate (as published by Reuters or other commercially available source for one, two, three or
six months (as selected by the Company) and (ii) an applicable margin. |
The initial applicable margin for base rate loans is 0.00%, and the initial applicable margin
for LIBOR loans is 0.75%. Commencing ten (10) business days after the Administrative Agent’s
receipt of the Company’s financial statements for the fiscal quarter ending December 31, 2007, and
quarterly
thereafter, the applicable margins will be subject to adjustment based on the Company’s leverage
ratio (consolidated debt/consolidated EBITDA).
Interest on the Company’s borrowings is payable quarterly in arrears for base rate loans and
at the end of each interest rate period (but not less often than quarterly) for LIBOR loans.
The Company is also required to pay a commitment fee on the difference between committed
amounts and amounts other than swingline loans actually used under the New Revolving Credit
Facility, which initially is 0.15% per annum, subject to adjustment in the same manner as the
applicable margins for interest rates.
Certain Covenants
The New Revolving Credit Facility requires us to meet certain financial tests, including,
without limitation:
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a consolidated total leverage ratio (consolidated debt/consolidated EBITDA) of not more
than 5.00 to 1.00 |
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a consolidated secured leverage ratio of not more than 2.50
to 1.00 (consolidated secured
debt/consolidated EBITDA); and |
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a minimum interest coverage ratio (consolidated EBITDA/consolidated interest expense) of
not less than 2.25 to 1.00. |
In addition, the New Revolving Credit Facility contains certain covenants that, among other
things, restrict additional indebtedness, liens and encumbrances, loans and investments,
acquisitions, dividends and other restricted payments, issuance of disqualified stock, transactions
with affiliates, asset dispositions, mergers and consolidations, prepayments or material amendments
of other indebtedness and other matters customarily restricted in such agreements.
Events of Default
The New Revolving Credit Facility contains customary events of default, including, without
limitation, payment defaults, breaches of representations and warranties, covenant defaults,
cross-defaults to certain other material indebtedness in excess of specified amounts, certain
events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts
and change in control.
Certain of the lenders under the New Revolving Credit Facility or their affiliates have
provided, and may in the future provide, certain commercial banking, financial advisory, and
investment banking services in the ordinary course of business for the Company, its subsidiaries
and certain of its affiliates, for which they receive customary fees and commissions.
The foregoing description of the New Revolving Credit Facility does not purport to be complete
and is qualified in its entirety by reference to the credit agreement constituting the New
Revolving Credit Facility, which is attached hereto as Exhibit 10.1.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The information under Item 1.01 above is incorporated by reference hereunder.
Item 9.01. Financial Statements and Exhibits.
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10.1 |
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Credit Agreement, dated as of December 21, 2007, by and among
the Company, as Borrower, certain lenders and Bank of America, N.A., as
Administrative Agent for the lenders. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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| Date: December 21, 2007 |
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CORRECTIONS CORPORATION OF AMERICA |
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By:
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/s/ Todd J Mullenger |
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Todd J Mullenger |
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Executive Vice President and |
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Chief Financial Officer |
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EXHIBIT INDEX
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Exhibit |
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10.1
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Credit Agreement, dated as of December 21, 2007, by and among the Company, as Borrower,
certain lenders and Bank of America, N.A., as Administrative Agent for the lenders. |