By Karen Pierog and Ross Kerber
(Reuters) – U.S. private prison operator CoreCivic Inc said on Monday it expects to move forward with a bond sale for Alabama prisons after two of three underwriters dropped out of the deal, which had come under attack by social justice activists.
Barclays Plc, the senior underwriter for the taxable bond deal originally sized at $633.5 million, and KeyBanc Capital Markets, a co-manager, confirmed they were no longer participating in the bond pricing in the U.S. municipal market.
In a statement, CoreCivic said it was “proceeding with efforts to help deliver desperately needed, modern corrections infrastructure to replace dilapidated, aging facilities that originally were designed with one purpose in mind – to warehouse individuals, not rehabilitate returning citizens.”
A company spokeswoman did not immediately provide details on how or when the bond transaction would take place.
Representatives of Stifel Financial Corp, the deal’s third underwriter, did not immediately respond to requests for comment.
CoreCivic stock was down about 2.5% at $8.39 a share on the New York Stock Exchange.
In February, Alabama agreed to 30-year leases with CoreCivic for two new men’s correctional facilities the company would build for about 7,000 prisoners.
While state officials insisted the prisons would not be private because they will be operated and staffed by the Alabama Department of Corrections, activists last week called on investors to snub the bonds and for the underwriters to withdraw from the deal.
“There should be no tolerance for any company or investor that benefits from a business model dependent on the imprisonment and continued captivity of other men and women,” a group of activists wrote in an April 12 letter criticizing CoreCivic, the private prison industry and Alabama’s prison system.
Signatories included investors from religious groups and socially minded investment managers. Also among the signers was Eric Glass, a senior portfolio manager for AllianceBernstein’s municipal impact portfolio.
He said he was signing only in his portfolio manager role. But a representative for the $700 billion asset manager also said it would not participate in the offering as it contravened the company’s “modern slavery policy.”
CoreCivic accused the activists of being “reckless and irresponsible,” saying they are “in effect advocating for outdated facilities, less rehabilitation space and potentially dangerous conditions for correctional staff and inmates alike.”
Last week, Social Venture Circle said it terminated Barclays corporate membership and refunded its $15,000 sponsorship and membership dues over the bank’s participation in the bond sale.
In its statement about no longer participating in the deal, Barclays said: “While our objective was to enable the state to improve its facilities, we recognize that this is a complex and important issue. In light of the feedback that we have heard, we will continue to review our policies.”
The bonds, to be issued through the Public Finance Authority, were rated A3 by Moody’s Investors Service and A-minus by S&P Global Ratings.
(Reporting By Karen Pierog in Chicago and Ross Kerber in Boston; Editing by Alden Bentley and Jonathan Oatis)
