Moody's rates Cornell notes

Moody's Investors Service said it assigned a B3 rating to Cornell Cos. Inc.'s proposed $110 million senior unsecured notes.

The outlook is stable.

According to Moody's, this rating reflects the company's leveraged capital structure, asset concentration, pending litigation, previous CEO departure and inherent risks in the private correction facility services business, including reliance on government appropriations for payment of awarded contracts, single and especial purpose properties, contract renewal risk, facility lease liability and legislative risks.

Also incorporated in the rating are Cornell's high occupancy rate, solid pipeline of new contracts, strong industry demand fundamentals, diversified contracts and business model that includes adult secure institutional services, juvenile justice and adult community.

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