The GEO Group, Inc., Village of Baldwin and Webber Township File Suit Against The State of Michigan for Wrongful Termination of Prison Lease

5 November 2005

The GEO Group, Inc. (NYSE: GGI) ("GEO"), together with the Village of Baldwin and Webber Township, Michigan, filed a lawsuit today against the Michigan Department of Corrections and the Department of Management & Budget for the wrongful termination of GEO's lease of a 480-bed correctional facility to the State of Michigan. The facility, known as the Michigan Youth Correctional Facility ("MYCF"), was designed, financed, constructed and operated by GEO following a competitive procurement issued by the state in 1997. Two agreements were entered into between GEO and the State of Michigan, a 20-year lease (subject to two 5-year extensions) and a 4-year operating agreement (renewed for a second 4-year term in 2003). The MYCF operating agreement was terminated by the Department of Corrections effective September 30, 2005. Following the Governor's line-item veto of legislative funding for the continued lease and operation of the facility, GEO received a 60-day notice of lease termination effective December 2, 2005, which gave rise to the lawsuit. (Logo: http://www.newscom.com/cgi-bin/prnh/20031201/FLM015LOGO ) In the suit, GEO asserts that the lease, by its express terms, cannot be terminated by the State of Michigan unless the legislative appropriations to the Department of Corrections for such items as rents, contracts, services, supplies and material contain a "specific prohibition" against the use of such appropriated funds for payment of the lease. GEO alleges that no such "specific prohibition" was contained in the appropriations bill for the Department of Corrections recently enacted by the Michigan Legislature. In the suit, GEO seeks a Declaratory Judgment and other related relief confirming its rights under the lease to continued lease payments from the state. The Village of Baldwin and Webber Township assert that state officials made promises to persuade the local governments to locate the facility in their community, including a long-term commitment to the use of the facility by the state, and in reliance upon such promises the local governmental entities invested significantly in infrastructure improvements necessary to support the operation of the facility. The Village and Township claim they will suffer irreparable injury if the lease is wrongfully terminated and are seeking an injunction against the state to continue lease payments until the issues of the lawsuit are finally settled. George C. Zoley, Chairman and Chief Executive Officer of GEO, said, "I am disappointed that we have been forced to file this action to enforce our rights under the lease agreement. We will continue to work diligently with all concerned parties to find a way to reactivate the prison on a fair and equitable basis." The GEO Group, Inc. ("GEO") is a world leader in the delivery of correctional and detention management, health and mental health, and other diversified services to federal, state, and local government agencies around the globe. GEO offers a turnkey approach that includes design, construction, financing, and operations. GEO represents government clients in the United States, Australia, South Africa, and Canada with contracts and awards to manage 42 facilities with a total design capacity of approximately 40,000 beds. This press release contains forward-looking statements regarding future events and future performance of GEO that involve risks and uncertainties that could materially affect actual results, including statements regarding estimated earnings, revenues and costs and our ability to maintain growth and strengthen contract relationships. Factors that could cause actual results to vary from current expectations and forward-looking statements contained in this press release include, but are not limited to: (1) GEO's ability to successfully pursue further growth and continue to enhance shareholder value; (2) GEO's ability to access the capital markets in the future on satisfactory terms or at all; (3) risks associated with GEO's ability to control operating costs associated with contract start-ups; (4) GEO's ability to timely open facilities as planned, profitably manage such facilities and successfully integrate such facilities into GEO's operations without substantial costs; (5) GEO's ability to win management contracts for which it has submitted proposals and to retain existing management contracts; (6) GEO's ability to obtain future financing on acceptable terms; (7) GEO's ability to sustain company- wide occupancy rates at its facilities; and (8) other factors contained in GEO's Securities and Exchange Commission filings, including the forms 10-K, 10-Q and 8-K reports.

Source: PR Newswire

All trademarks and copyrighted information contained herein are the property of their respective owners.