U.S. private prison company GEO Group said on Wednesday it would suspend quarterly dividend payment to repay debt and fund growth as it faces pressures under limits on the sector from President Joe Biden.
Earlier this year, Biden signed an executive order to roll back the U.S. government’s use of private prisons, a part of what he called an initiative to tackle systemic racism.
Another private prison, CoreCivic Inc, has said it would offer $400 million in bonds to reduce debt and for corporate purposes.
Shares of GEO were down about 6% before the bell and those of CoreCivic fell about 2%.
GEO said it intends to maintain its corporate tax structure as a Real Estate Investment Trust (REIT), but would evaluate the structure, considering potential changes to its financial operating performance among other factors.
It had $291 million in cash on hand and about $209 million in borrowing capacity available under a revolving credit facility and $450 million under its senior credit facility, as of March 31, the company said.