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JPM Chase Financial Ties to Private Prisons, Center for Popular Democracy, 2017

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JPMorgan	
  Chase:	
  Financier	
  to	
  Private	
  Prisons	
  
The	
  Center	
  for	
  Popular	
  Democracy	
  and	
  Make	
  the	
  Road	
  New	
  York	
  
	
  
The	
  nation’s	
  two	
  largest	
  private	
  prison	
  and	
  immigrant	
  detention	
  corporations-­‐-­‐CoreCivic	
  (formerly	
  
known	
  as	
  Corrections	
  Corporation	
  of	
  America)	
  and	
  Geo	
  Group-­‐-­‐rely	
  on	
  billions	
  of	
  dollars	
  of	
  debt	
  
financing	
  to	
  expand	
  their	
  operations	
  (See	
  Appendix	
  I).	
  Wall	
  Street’s	
  largest	
  banks	
  provide	
  this	
  
financing	
  in	
  the	
  form	
  of	
  loans,	
  lines	
  of	
  credit,	
  and	
  bonds.	
  According	
  to	
  2017	
  U.S.	
  Securities	
  and	
  
Exchange	
  Commission	
  filings,	
  there	
  are	
  significant	
  financial	
  ties	
  between	
  JPMorgan	
  Chase	
  and	
  both	
  
CoreCivic	
  and	
  Geo	
  Group.	
  	
  
Term	
  Loan	
  
JPMorgan	
  Chase	
  is	
  part	
  of	
  a	
  syndicate	
  of	
  banks	
  that	
  makes	
  significant	
  loans	
  to	
  CoreCivic.	
  As	
  of	
  June	
  
2017,	
  Chase	
  loaned	
  CoreCivic	
  $13.23	
  million	
  through	
  a	
  term	
  loan.1	
  Under	
  this	
  term	
  loan,	
  CoreCivic	
  
borrowed	
  a	
  total	
  of	
  $90,000,000	
  from	
  8	
  banks	
  including	
  Chase	
  which	
  loaned	
  14.7	
  percent	
  of	
  the	
  total	
  
loan.2	
  
	
  
Corporate	
  Bonds	
  
Bond	
  Ownership	
  
● Based	
  on	
  analysis	
  by	
  In	
  the	
  Public	
  Interest,	
  J.P.	
  Morgan	
  Investment	
  Management	
  and	
  J.P.	
  
Morgan	
  Asset	
  Management	
  owned	
  a	
  combined	
  $89	
  million	
  of	
  CoreCivic’s	
  bonds	
  as	
  of	
  October	
  
2016.3	
  	
  
● JPMorgan	
  Investment	
  Management	
  owned	
  a	
  combined	
  total	
  of	
  $77	
  million	
  of	
  Geo	
  Group’s	
  
bonds	
  as	
  of	
  October	
  2016.4	
  	
  	
  
	
  
Underwriting	
  
● Chase	
  was	
  one	
  of	
  11	
  underwriters	
  of	
  CoreCivic’s	
  most	
  recent	
  2015	
  corporate	
  bond	
  offering	
  of	
  
$250M.	
  
○ Chase	
  underwrote	
  $40	
  million	
  in	
  bonds5	
  and	
  received	
  an	
  underwriting	
  discount	
  from	
  
of	
  $300,000.6	
  
1

The	
  value	
  of	
  the	
  Chase	
  loan	
  was	
  derived	
  from	
  the	
  commitment	
  percentages	
  and	
  the	
  total	
  loan	
  value
Source	
  for	
  Committment	
  Percentages	
  is	
  CoreCivic’s	
  (fka	
  CCA)	
  “Third	
  Amended	
  and	
  Incremental	
  Term	
  Loan	
  Agreement	
  
chart	
  dated	
  6	
  October	
  2015,	
  Schedule	
  1,”	
  
https://www.sec.gov/Archives/edgar/data/1070985/000119312515338832/d52952dex101.htm; Securities	
  and	
  Exchange	
  
Commission	
  filing,	
  CoreCivic,	
  Inc.	
  Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2017,	
  
https://www.sec.gov/Archives/edgar/data/1070985/000156459017016361/cxw-­‐10q_20170630.htm,	
  page	
  10.
3
“The	
  Banks	
  that	
  Finance	
  Private	
  Prison	
  Companies,”	
  In	
  the	
  Public	
  Interest,	
  November	
  2016,	
  Based	
  on	
  Bloomberg	
  
Terminal	
  data	
  as	
  of	
  October	
  2016,	
  https://www.inthepublicinterest.org/wp-­‐
content/uploads/ITPI_BanksPrivatePrisonCompanies_Nov2016.pdf,	
  Table	
  8,	
  page	
  18.
4
“The	
  Banks	
  that	
  Finance	
  Private	
  Prison	
  Companies,”	
  In	
  the	
  Public	
  Interest,	
  November	
  2016,	
  Based	
  on	
  Bloomberg	
  
Terminal	
  data	
  as	
  of	
  October	
  2016,	
  https://www.inthepublicinterest.org/wp-­‐
content/uploads/ITPI_BanksPrivatePrisonCompanies_Nov2016.pdf,	
  page	
  6.	
  
2

FINAL	
  

● GEO	
  Group	
  issued	
  its	
  most	
  recent	
  set	
  of	
  bonds,	
  totaling	
  $350	
  million,	
  in	
  April	
  2016.7	
  These	
  
bonds	
  have	
  a	
  6	
  percent	
  interest	
  rate	
  and	
  a	
  2026	
  due	
  date.8	
  	
  
○ Chase	
  underwrote	
  $42	
  million	
  of	
  notes	
  for	
  GEO	
  Group’s	
  offering	
  in	
  20169	
  and	
  received	
  
an	
  underwriting	
  discount	
  of	
  $630,000.10	
  	
  
● In	
  September	
  2014,	
  GEO	
  Group	
  issued	
  a	
  set	
  of	
  bonds	
  totaling	
  $250	
  million	
  that	
  had	
  a	
  5.875	
  
percent	
  interest	
  rate	
  and	
  a	
  2024	
  due	
  date.11	
  
○ Chase	
  underwrote	
  $31.25	
  million	
  of	
  notes	
  for	
  Geo	
  Group’s	
  offering	
  in	
  201412	
  and	
  
received	
  an	
  underwriting	
  discount	
  of	
  $468,750.13	
  
● Chase	
  has	
  a	
  long-­‐standing	
  history	
  of	
  underwriting	
  CoreCivic	
  bonds.	
  Chase	
  was	
  part	
  of	
  a	
  
syndicate	
  of	
  banks	
  that	
  underwrote	
  $675	
  million	
  notes	
  for	
  CoreCivic’s	
  2013	
  bonds.14	
  The	
  bank	
  
also	
  underwrote	
  $105,788,000	
  in	
  bonds	
  in	
  2009.15	
  
	
  
Revolving	
  Credit	
  
CoreCivic	
  	
  
As	
  of	
  June	
  30,	
  2017,	
  CoreCivic	
  owed	
  $411	
  million	
  under	
  its	
  revolving	
  credit	
  agreement.16	
  $60	
  million	
  
of	
  that	
  debt	
  is	
  owned	
  by	
  JPMorgan	
  Chase.17	
  The	
  agreement	
  includes	
  an	
  “accordion”	
  feature	
  that	
  

5

CoreCivic	
  Prospectus	
  Supplement	
  (for	
  5.00%	
  bonds	
  due	
  2022),	
  dated	
  21	
  September	
  2015,	
  
https://www.sec.gov/Archives/edgar/data/1070985/000119312515325050/d96970d424b5.htm,	
  page	
  S-­‐55;	
  List	
  of	
  
current	
  bond	
  offerings	
  for	
  “CoreCivic	
  CXW”	
  reported	
  on	
  Financial	
  Industry	
  Regulatory	
  Authority,	
  Inc.	
  (Accessed	
  
8/31/2017),	
  	
  https://finra-­‐markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C639851&symbol=CXW4291234.	
  
6
CoreCivic	
  agreed	
  to	
  pay	
  each	
  underwriting	
  bank	
  an	
  underwriting	
  discount	
  per	
  note	
  of	
  0.75	
  percent.	
  By	
  multiplying	
  the	
  
principal	
  amount	
  of	
  notes	
  Chase	
  underwrote	
  ($40	
  million)	
  by	
  0.75%,	
  Chase	
  received	
  an	
  underwriting	
  discount	
  of	
  
$300,000.
7
Securities	
  and	
  Exchange	
  Commission	
  filing,	
  Geo	
  Group	
  Form	
  8-­‐K,	
  April	
  18,	
  2016,	
  
https://www.sec.gov/Archives/edgar/data/923796/000119312516545008/d172173d8k.htm,	
  page	
  1.	
  
8
	
  Securities	
  and	
  Exchange	
  Commission	
  filing,	
  Geo	
  Group	
  Form	
  8-­‐K,	
  April	
  18,	
  2016,	
  
https://www.sec.gov/Archives/edgar/data/923796/000119312516545008/d172173d8k.htm,	
  page	
  1.	
  
9
Securities	
  and	
  Exchange	
  Commission	
  filing,	
  Geo	
  Group	
  Form	
  424B5,	
  dated	
  April	
  11,	
  2016,	
  	
  
https://www.sec.gov/Archives/edgar/data/914670/000119312516539978/d167214d424b5.htm,	
  page	
  S-­‐89.	
  
10
GEO	
  Group’s	
  Prospectus	
  Supplement	
  (for	
  6.00%	
  bonds	
  due	
  2026),	
  dated	
  11	
  April	
  2016,	
  second	
  page	
  (no	
  page	
  number	
  
in	
  filing).	
  The	
  values	
  in	
  the	
  table	
  were	
  derived	
  by	
  multiplying	
  the	
  principal	
  amount	
  of	
  notes	
  each	
  bank	
  agreed	
  to	
  
underwrite	
  by	
  1.5	
  percent,	
  the	
  underwriting	
  discount	
  per	
  note:	
  	
  
https://www.sec.gov/Archives/edgar/data/914670/000119312516539978/d167214d424b5.htm,	
  pages	
  1	
  and	
  S-­‐89.	
  
11
GEO	
  Group’s	
  Prospectus	
  Supplement	
  (for	
  6.00%	
  bonds	
  due	
  2026),	
  April	
  11,	
  2014,	
  
https://www.sec.gov/Archives/edgar/data/914670/000119312514351631/d791758d424b5.htm,	
  	
  page	
  S-­‐89.	
  
12
Securities and Exchange Commission filing, Geo Group’s Prospectus Supplement, September 24,
2014,https://www.sec.gov/Archives/edgar/data/914670/000119312514351631/d791758d424b5.htm,	
  page	
  S-­‐94.	
  
13
GEO	
  Group’s	
  Prospectus	
  Supplement	
  (for	
  5.875%	
  bonds	
  due	
  2024),	
  September	
  24,	
  2014,	
  second	
  page	
  (no	
  page	
  number	
  
in	
  filing).	
  The	
  values	
  in	
  the	
  table	
  were	
  derived	
  by	
  multiplying	
  the	
  principal	
  amount	
  of	
  notes	
  each	
  bank	
  agreed	
  to	
  
underwrite	
  by	
  1.5	
  percent,	
  the	
  underwriting	
  discount	
  per	
  note:	
  
https://www.sec.gov/Archives/edgar/data/914670/000119312514351631/d791758d424b5.htm,	
  pages	
  1	
  and	
  S-­‐94.	
  
14
“The	
  Banks	
  that	
  Finance	
  Private	
  Prison	
  Companies,”	
  In	
  the	
  Public	
  Interest,	
  November	
  2016,	
  Based	
  on	
  Bloomberg	
  
Terminal	
  data	
  as	
  of	
  October	
  2016,	
  https://www.inthepublicinterest.org/wp-­‐
content/uploads/ITPI_BanksPrivatePrisonCompanies_Nov2016.pdf,	
  page	
  41.	
  
15
Security	
  and	
  Exchange	
  Commission	
  filinig,	
  Corrections	
  Corporation	
  of	
  America,	
  Prospectus	
  Supplement	
  dated	
  May	
  19,	
  
2009,	
  https://www.sec.gov/Archives/edgar/data/1070985/000095014409004468/g19154b5e424b5.htm,	
  page	
  S-­‐82.	
  
FINAL	
  

allows	
  the	
  company	
  to	
  request	
  an	
  increase	
  in	
  their	
  credit	
  limit	
  up	
  to	
  an	
  additional	
  $350	
  million.	
  Under	
  
the	
  agreement,	
  CoreCivic’s	
  revolver	
  matures	
  in	
  July,	
  2020.18	
  
	
  
Revolving	
  Credit	
  
Geo	
  Group	
  	
  
As	
  of	
  June	
  30,	
  2017,	
  Geo	
  Group	
  had	
  paid	
  its	
  debt	
  under	
  the	
  revolving	
  credit	
  agreement	
  down	
  to	
  $194	
  
million.19	
  The	
  agreement	
  includes	
  an	
  “accordion”	
  feature	
  that	
  allows	
  the	
  company	
  to	
  request	
  an	
  
increase	
  in	
  their	
  credit	
  limit	
  up	
  to	
  an	
  additional	
  $450	
  million.20	
  Under	
  the	
  agreement,	
  Geo	
  Group’s	
  
revolver	
  matures	
  in	
  May,	
  2021.21	
  	
  
	
  
Chase	
  stockholdings	
  in	
  private	
  prison	
  companies	
  (as	
  of	
  June	
  30,	
  2017)22	
  
As	
  of	
  June	
  2017,	
  JPMorgan	
  Chase	
  has	
  significant	
  stockholdings	
  in	
  both	
  CoreCivic	
  and	
  and	
  Geo	
  Group	
  
worth	
  $11	
  million	
  and	
  $72	
  million,	
  respectively.	
  	
  
	
  
	
  
	
  

CoreCivic	
  

Bank	
  

Values	
  of	
  
Shares	
  
Invested	
  

JPMorgan	
  Chase	
  

$11,063,000	
   417,787	
  

Geo	
  Group	
  

Number	
   Value	
  of	
  Shares	
  
of	
  Shares	
   Invested	
  
Invested	
  
$72,764,000	
  

Number	
  of	
  
Shares	
  
Invested	
  
2,680,079	
  

	
  
	
  

	
  

16

Securities	
  and	
  Exchange	
  Commission	
  filing,	
  CoreCivic,	
  Inc.	
  Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2017,	
  
http://services.corporate-­‐ir.net/SEC.Enhanced/SecCapsule.aspx?c=117983&fid=15149023,	
  page	
  10.	
  
17
Under	
  the	
  credit	
  agreement,	
  JPMorgan	
  committed	
  to	
  providing	
  14.7%	
  of	
  CoreCivic’s	
  $900	
  million	
  line	
  of	
  credit.	
  
Corrections	
  Corporation	
  of	
  America,	
  Form	
  8-­‐K,	
  Exhibit	
  10.1,	
  Schedule	
  1.	
  July	
  24,	
  2015,	
  
http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=10820310&RcvdDate=7/24/2015&CoName=CORECIVIC%2C%20I
NC.&FormType=8-­‐K&View=html.	
  14.7%	
  of	
  the	
  outstanding	
  $411	
  million	
  debt	
  ($60	
  million)	
  is	
  owed	
  to	
  Chase.	
  
18
Securities	
  and	
  Exchange	
  Commission	
  filing,	
  CoreCivic,	
  Inc.	
  Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2017,	
  
http://services.corporate-­‐ir.net/SEC.Enhanced/SecCapsule.aspx?c=117983&fid=15149023,	
  page	
  10.	
  
19
Securities	
  and	
  Exchange	
  Commission	
  filing,	
  CoreCivic,	
  Inc.	
  Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2017,	
  
http://services.corporate-­‐ir.net/SEC.Enhanced/SecCapsule.aspx?c=117983&fid=15149023,	
  page	
  23.
20
Securities and Exchange Commission filing, CoreCivic, Inc. Form 10-Q, for Quarterly Period Ending June 30,
2017, http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=117983&fid=15149023, page 22.
21
Securities	
  and	
  Exchange	
  Commission	
  filing,	
  Geo	
  Group	
  Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2017,	
  
http://investors.geogroup.com/Cache/389804090.pdf,	
  page	
  55.	
  
22
Data	
  reported	
  on	
  CoreCivic	
  and	
  Geo	
  Group’s	
  13F	
  SEC	
  filings	
  for	
  the	
  quarter	
  ended	
  June,	
  30	
  2017,	
  as	
  reported	
  on	
  
NASDAQ:	
  CoreCivic:	
  http://www.nasdaq.com/symbol/cxw/institutional-­‐holdings?page=3;	
  Geo	
  Group:	
  
http://www.nasdaq.com/symbol/geo/institutional-­‐holdings	
  (Accessed	
  8/31/2017).	
  
FINAL	
  

Appendix	
  I	
  
	
  
CoreCivic:	
  1.4	
  billion	
  in	
  debt	
  (as	
  of	
  June	
  30,	
  2017)23	
  
	
  
Type	
  of	
  Debt	
  

Loan	
  Date	
  

Maturity	
  Date	
  

Amount	
  

Term	
  loan	
  

2015	
  

2020	
  

$90,000,000	
  

Revolving	
  credit	
  

2013/2015	
  

2020	
  

$411,000,000	
  

4.125%	
  bonds	
  

2013	
  

2020	
  

$325,000,000	
  

5.0%	
  bonds	
  

2015	
  

2022	
  

$250,000,000	
  

4.625%	
  bonds	
  

2013	
  

2023	
  

$350,000,000	
  

Total	
  

	
  

	
  

$1,426,000,000	
  

Note:	
  The	
  revolving	
  credit’s	
  loan	
  date	
  is	
  expressed	
  as	
  “2013/2015”	
  because	
  the	
  original	
  
revolving	
  credit	
  agreement	
  (from	
  2013)	
  was	
  amended	
  (in	
  2015).	
  

Geo	
  Group:	
  2.1	
  billion	
  in	
  debt	
  (as	
  of	
  June	
  30,	
  2017)24	
  
	
  
Type	
  of	
  Debt	
  

Loan	
  Date	
  

Maturity	
  Date	
  

Amount	
  

Term	
  loan	
  

2014/2016	
  

2020	
  

$798,000,000	
  

Revolving	
  credit	
  

2014/2016	
  

2021	
  

$194,168,000	
  

5.875%	
  bonds	
  

2013	
  

2022	
  

$250,000,000	
  

5.125%	
  bonds	
  

2013	
  

2023	
  

$300,000,000	
  

5.875%	
  bonds	
  

2014	
  

2024	
  

$250,000,000	
  

6.0%	
  bonds	
  

2016	
  

2026	
  

$350,000,000	
  

Total	
  

	
  

	
  

$2,142,168,000	
  

	
  
23

Securities	
  and	
  Exchange	
  Commission	
  filing,	
  CoreCivic,	
  Inc.	
  Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2016.	
  
http://services.corporate-­‐ir.net/SEC.Enhanced/SecCapsule.aspx?c=117983&fid=14518364,	
  page	
  16;	
  Securities	
  and	
  
Exchange	
  Commission	
  filing,	
  CoreCivic,	
  Inc.	
  Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2017,	
  
http://services.corporate-­‐ir.net/SEC.Enhanced/SecCapsule.aspx?c=117983&fid=15149023,	
  page	
  16.	
  
24
Securities	
  and	
  Exchange	
  Commission	
  filing,	
  Geo	
  Group	
  Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2016,	
  
http://investors.geogroup.com/Cache/35390055.pdf,	
  page	
  18;	
  Securities	
  and	
  Exchange	
  Commission	
  filing,	
  Geo	
  Group	
  
Form	
  10-­‐Q,	
  for	
  Quarterly	
  Period	
  Ending	
  June	
  30,	
  2017,	
  http://investors.geogroup.com/Cache/389804090.pdf,	
  page	
  21.	
  
FINAL	
  

Note:	
  This	
  table	
  excludes	
  non-­‐recourse	
  debt	
  and	
  other	
  debts	
  that	
  GEO	
  Group	
  includes	
  in	
  its	
  
financial	
  statements.	
  The	
  company’s	
  total	
  debt	
  is	
  2,653,179,000	
  as	
  of	
  June,	
  30,	
  2017,	
  and	
  the	
  
company’s	
  long-­‐term	
  debt	
  is	
  $2,107,208,000.	
  The	
  term	
  loan’s	
  and	
  revolving	
  credit’s	
  loan	
  dates	
  
are	
  expressed	
  as	
  “2014/2016”	
  because	
  the	
  original	
  agreements	
  from	
  2014	
  were	
  amended	
  in	
  
2016.	
  
	
  
A	
  note	
  on	
  methodology:	
  This	
  factsheet	
  draws	
  heavily	
  on	
  the	
  methodology	
  developed	
  and	
  published	
  
by	
  In	
  the	
  Public	
  Interest	
  in	
  their	
  groundbreaking	
  November	
  2016	
  report	
  “The	
  Banks	
  that	
  Finance	
  
Private	
  Prison	
  Companies.”	
  Full	
  text	
  of	
  that	
  report	
  is	
  available	
  here:	
  
https://www.inthepublicinterest.org/wp-­‐
content/uploads/ITPI_BanksPrivatePrisonCompanies_Nov2016.pdf	
  
	
  

FINAL

 

 

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