Canada Goose Outlet Fitch rates Corrections Corp of America
Canada Goose sale (The following statement was released by the rating agency)
canada goose clearance Feb 7 Fitch Ratings has assigned a initial Issuer Default Rating (IDR) to Corrections Corp. of America (CCA). Fitch has also assigned canada goose store a rating to the company $785 million secured credit facility, and a rating to $645 million of senior unsecured notes. Canada Goose online The Rating Outlook is Stable. The IDR considers the attractive long term credit characteristics of the private correctional facilities industry, including:
cheap Canada Goose (2) modest private sector penetration of prison populations, andCCA maintains a leading https://www.canadagooseoutletstore.co.uk position (44% market share) in the industry, which is highly concentrated and has significant barriers to entry. cheap Canada Goose GEO Group is its largest competitor with about 31% market share. Fitch also views the industry in the context of a comparable set that includes hotels, hospitals, private canada goose prisons, and REITs. private correctional facilities industry is at an canada goose outlet online early stage of its industry life cycle. Although the privatization of correctional facilities dates back to the early 1980s, only about 10% of beds are currently outsourced. The number of outsourced beds has grown from 11,000 in 1990 to more than 205,000 today, Canada Goose Outlet or a CAGR of 15.7% over that time frame. In contrast, canada goose black friday sale roughly 20% of hospital beds are privatized. CCA business reflects the stability tied to contractual income. CCA enters into contracts with the federal, cheap canada goose uk state, and/or local governments that guarantees (1) a per diem rate or (2) a take or pay arrangement that guarantees minimum occupancy levels.
canada goose Typical contracts are for roughly 3 5 years with multiple renewal terms, but can be terminated at any time without cause. Additionally, contracts are subject to legislative bi annual or annual appropriation canada goose factory sale of funds, so strained budget situations at federal, state, and local Canada Goose Jackets levels could pressure negotiated rates. Mitigating this concern is that the company had strong relative financial performance through the recent recession. The company received Canada Goose Online six requests for assistance with contracts in 2009 2010, but only one in 2011. CCA was able to adjust cost items in contracts to compensate for reduced revenue levels such that the contracted profit did not Canada Goose sale deteriorate. Since 2007, Fitch calculates that EBITDA has grown from $354 million to $455 million on an LTM Sept. 30, 2011 basis, without reflecting a decline in any single year. Another concern is that the company customers are concentrated. Immigration and Customs Enforcement (ICE; 12%). State customers accounted for 50% buy canada goose jacket cheap of revenues in 2010 with the California Department of Corrections and Rehabilitation (CDCR) making up 13%.
canada goose coats on sale Value of Real Estate is Limited: Based on a cost of $60,000 per bed, the replacement cost of the company 45 facilities is around canadian goose jacket $3.8 billion, which compares to roughly $1.2 billion canada goose clearance of debt and a current enterprise value of $3.5 billion. The company real estate holdings provide only modest credit support in uk canada goose outlet Fitch view. There are limited alternative uses of prisons, the properties are often in rural areas, and there is no established mortgage market as a contingent Canada Goose Parka liquidity source. However, the facilities do provide essential governmental services, so there is inherent value in the properties. Additionally, prisons have a long depreciable life (50 years) with a practical useful life greater than that (75 years) and CCA has a young owned portfolio (average age of 15 years) CCA Maintains a Strong Financial Profile: As of Sept. 30, 2011 Fitch calculates total debt/ LTM EBITDA canada goose uk black friday of 2.7x, interest coverage of 6.2x, and FFO fixed charge coverage of 4.9x. CCA maintains solid financial flexibility as it generates canada goose coats on sale annual FFO less maintenance capex of roughly $250 million that can be used to support an ample amount of fluctuations in accounts receivable, prison construction, share repurchases, and/or dividends. Ratings incorporate management Canada Goose Coats On Sale current financial policies including: (1) a target leverage ratio of 3.0x; (2) a fixed charge coverage of no less than 3.5x; and (3) minimum liquidity of at least $100 million.
Canada Goose Parka The company ROI hurdle rate is 13% 15% cash on cash, pre tax EBITDA returns to all capital investments. CCA debt maturity profile is attractive. The company executed a credit facility refinancing transaction on Jan. 6, 2012, for $785 million, which replaced canada goose clearance sale the existing $450 million facility, extended the term to Dec. 2016, canada goose uk outlet repaid $335 million of 2013 unsecured notes (out of $375 million outstanding), and achieved pricing of L+150. Following the transaction, outstanding unsecured bonds include $40 million of 6.25% senior notes due 2013, $150 million of 6.75% senior notes due 2014, and $455 million of 7.75% of senior notes due 2017. The secured credit facility is rated one notch above the IDR. CCA accounts receivables are pledged as collateral, which totaled $261 million as of Sept. 30, 2011. Equity in the company buy canada goose jacket domestic operating subsidiaries and 65% of international subs are also pledged as collateral, but long term fixed assets are not pledged. As of LTM Sept. 30, 2011, uk canada goose leverage through the secured credit facility was roughly 0.5x and 1.0x on a fully drawn basis.
canada goose store On an LTM Sept. 30, 2011 canada goose uk shop basis and proforma for the refinancing transaction, leverage through the secured credit facility would be roughly 1.6x on a fully drawn basis. Considerations canada goose coats for an investment grade IDR include the following:.