CoreCivic Inc.'s leadership attributed the recent loss of some of its banking relationships to "politically motivated threats" and "intentional misrepresentations" of the private prison operators' business.
Banks including Bank of America Corp., JPMorgan Chase & Co. and SunTrust Banks Inc. all said recently that they will cease lending to private prison operators, including CoreCivic and GEO Group Inc., as a result of the ongoing controversy around conditions at migrant detention facilities on the U.S.-Mexico border. During an Aug. 6 earnings conference call, CoreCivic President and CEO Damon Hininger said the banks bowed to a small group of activists pushing false information.
"The good news is that there are plenty of financial partners, both new and existing, that are interested in the facts rather than the political posturing and unproductive virtue-signaling," he said.
Hininger said the company does not house unaccompanied minors and does not operate facilities on behalf of U.S. Customs and Border Protection, whose "overcrowded" facilities at the U.S.-Mexico border have been in the news recently. He said CoreCivic has a human rights policy in place and has supported programs to minimize inmate recidivism. He added that the company does not advocate around sentencing and detention laws.
"We do not enforce immigration laws, arrest anyone who may be in violation of immigration laws, or have any say whatsoever in the individual's deportation or release," he said.
Hininger said he remains confident in the company's continued access to capital given its strong cash flow generation, general growth trajectory and "prudent" balance sheet management. Excess cash flows above the current dividend level will be used, for now, to lower leverage, even as the company continues to explore M&A opportunities to further diversify its business, he said.
"While the debt and equity capital markets have temporarily become more constrained, we continue to assess M&A opportunities on a case-by-case basis, and continue to believe our diversification strategy through M&A is the best path forward for creating long-term shareholder value," he said.