New G4S boss seeks $900m for turnaround drive

August 29, 2013

LONDON: The world’s largest security services firm, plans to raise about ¤600m ($932m) by selling shares and assets as its new boss seeks to restore its battered reputation by cutting debt and focusing on emerging markets, Reuters reported on Wednesday.

Chief Executive Ashley Almanza, a former executive at oil and gas firm BG Group, was promoted from finance chief in June after a string of blunders by his predecessor, including a failed takeover bid in 2011, a botched contract to staff the 2012 Olympic Games and a profit warning in May.

He said on Wednesday 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.

Panmure Gordon analyst Mike Allen welcomed Almanza’s debut announcement as chief executive.

“We applaud the quick work undertaken by management to re-structure the group and shore up the balance sheet,” he said.

At 0905 GMT, G4S shares were up 3.7 per cent at 255.14 pence, the biggest rise by a UK blue-chip company and reversing early losses. Shares often fall following the announcement of equity fundraisings, as these cut earnings per share for investors.

G4S, which runs services from managing prisons and transporting cash to guarding the Wimbledon tennis championships, aims to benefit from a trend among cash-strapped governments and businesses to outsource security work.

However, it has come under pressure as governments in developed markets in particular have cut back services.

The company said its first-half operating profit margin slipped to 5.5 per cent from 5.9 per cent 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  1.95 billion pounds as of June 30, some 3.2 times earnings before interest, tax, depreciation and amortization compared with a target of 2-2.5 times.

However the group, which wants to grow revenue in developing markets in Asia, Africa and Latin America from a third to half of its total, said it had a global sales pipeline of 4 billion pounds. It did not provide details, but noted strong demand from financial services, mining and government sectors in Africa.

“G4S has excellent market positions, particularly in developing markets and as a result of which we have very material growth opportunities,” Almanza said.

 

LINK: http://www.punchng.com/business/international-business/new-g4s-boss-seeks-900m-for-turnaround-drive/

 

SOURCE: PUNCH