G4S To Raise £600m To Cut Debt Pile
G4S, the security firm whose reputation was badly damaged by its failure to deliver enough staff for its London Olympics contract, has announced plans to raise £600m to cuts its debt pile.
The company said it planned to sell shares and assets and focus on emerging markets under a strategy drawn up by new chief executive Ashley Almanza.
Mr Almanza, a former executive at oil and gas firm BG Group, was promoted from finance chief in June after Nick Buckles left following a series of blunders including a failed takeover bid in 2011, the botched security contract at the 2012 Games and a profit warning in May.
The new man at the helm of the world's biggest security services firm said he would give a detailed plan in November, but that the initial measures he was putting in place should help to avoid a costly credit-rating downgrade, improve profit margins and start to deliver tangible benefits in 2014.
News of the fundraising and fresh approach helped G4S shares rise more than 3.5% in early trading on the FTSE 100.
The company also confirmed a Sky News story that it had appointed Himanshu Raja as its new chief financial officer to drive its plans forward.
G4S, which runs services from managing prisons to transporting cash, has come under pressure as governments in developed markets cut back services.
It company had hoped to benefit from the outsourcing of more public sector work but that has largely failed to materialise.
The company said its first-half operating profit margin slipped to 5.5% from 5.9% in the same period last year, reflecting a lost prison contract in the Netherlands and squeezed pricing in Britain and elsewhere in Europe.
Net debt rose to £1.95bn as of June 30.
G4S said that as part of its efforts to address that figure it would place 140.9 million new ordinary shares representing up to 9.99% of its existing share capital with new and existing investors via an accelerated bookbuild.
That equates to around £350m at current prices.
The company said its largest shareholder, Invesco, supported the placing and intended to participate in it.
G4S also said it would sell a number of businesses, likely to be in developed markets, which could raise up to £250m in the next year and would restructure other units.
It had agreed, the company confirmed, to sell its Canadian cash security and Colombia Data solutions businesses for £100m.