G4S Plans Rights Offer, Asset Sales to Shore Up Finances

G4S Plc (GFS), which replaced its chief executive after bungling the London Olympics security contract, said it plans a sale of shares and disposals to shore up its balance sheet and pay down inflated debt.

The guard and security company will sell as many as 140.9 million new shares to existing investors, equal to a stake of 9.99 percent, it said in a statement. G4S has also found buyers for two businesses to raise an additional 100 million pounds, with an additional 150 million pounds in potential disposals lined up. The shares fell 3 percent at the open of trading in London today.

G4S is emerging from a strategic review undertaken by Chief Executive Officer Ashley Almanza, who replacedNick Buckles on June 1. His priority is to tackle G4S’ net debt to earnings ratio of 3.2 times before a downgrade of its credit rating that would cost an estimated 25 million pounds to 30 million pounds a year, it said.

“On the operational front, we plan to introduce systems and processes to improve efficiency and risk management and we will be restructuring a number of businesses to ensure that they are more competitive and able to deliver improved margins,” Almanza said in the statement.

Citigroup, JPMorgan and Barclays Bank Plc are joint bookrunners. Invesco Asset Management Ltd., which currently holds about 14.85 percent of G4S, is backing the transaction.

G4S also announced the sale of Canadian Cash solutions and a data solutions business in Colombia.

Profit before interest, taxes and amortization was little changed in the first half at 201 million pounds. Sales climbed 7.2 percent and G4S flagged a contract pipeline worth 4 billion pounds a year. It generated 218 million pounds in cash from operations.

To contact the reporter on this story: Andrew Noel in London at anoel@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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