Stifel No Longer Part of Scuttled Alabama Prison Bond Deal
(Bloomberg) -- Stifel Financial Corp. said it is no longer involved with a bond sale that would have financed the construction of two privately owned prisons in Alabama.
The transaction was scuttled soon before it was set to price in April after lead underwriter Barclays Plc faced criticism for appearing to backtrack on a pledge to curtail work with for-profit prison companies. Another underwriter, KeyBanc Capital Markets, also withdrew from the transaction, as did the Wisconsin agency that was being used to issue the debt. But it had been unclear whether Stifel, another co-manager, was still involved and could potentially revive the transaction.
“Stifel is no longer engaged with CoreCivic, any conduit or the State of Alabama regarding the financing of this project,” Joel Jeffrey, senior vice president for investor relations, said in an email to activists that had urged the bank to withdrawal from the transaction.
A spokesperson from the bank confirmed the contents of the email to Bloomberg.
Jeffrey said that the transaction has been “withdrawn from the market.”
The bond sale was slated to raise money for a CoreCivic Inc.-owned company that was planning to build two prisons in Alabama. The facilities were set to be leased and run by the state’s Department of Corrections.
Barclays’ lead role in the deal drew controversy because it appeared to be at odds with its announcement two years ago that it would no longer provide new financing to private prison companies, whose model of profiting from incarceration has drawn controversy for years. Other banks, including
Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co., also said at the time that they were severing ties with the industry.
The banks’ last minute decision to abandon the deal was highly unusual and may reflect the growing clout of investors who are pouring into socially minded investment funds, creating a lucrative and growing business that financial institutions are eager to court.
Last week, a group of activists sent a letter urging Stifel Chief Executive Officer Ronald Kruszewski to pull his bank from the transaction. At the time, the St. Louis-based bank said it acknowledged the concerns and that there were “many sides” to the issue.
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