G4S Plans Rights Offer, Asset Sales to Shore Up FinancesEshe Nelson
G4S Plc, which replaced its chief executive officer after bungling the 2012 London Olympics security contract, said it plans a share sale and disposals to shore up its balance sheet and pay down inflated debt.
The world’s biggest provider of guarding services will sell as many as 140.9 million new shares to existing investors, 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 ($155 million), with 150 million pounds more in potential disposals lined up. The shares rose as much as 5.2 percent, the biggest intraday increase in 22 months.
G4S is emerging from a strategic review undertaken by Chief Executive Officer Ashley Almanza, who replaced Nick Buckles on June 1. His priority is to tackle G4S’s net-debt-to-earnings ratio of about 3.2 times before a downgrade of its credit rating that would cost an estimated 25 million pounds to 30 million pounds a year, the company 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 Inc., JPMorgan Chase & Co. and Barclays Plc are joint bookrunners. Invesco Asset Management Ltd., which currently holds about 14.85 percent of Crawley, England-based G4S, is backing the transaction.
G4S also announced the sale of a Canadian cash unit and a data business in Colombia.
The shares rose 3.8 percent to 254.6 pence at 11:51 a.m. in London, giving the company a market value of 3.6 billion pounds.
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.
G4S yesterday named Himanshu Raja as its new chief financial officer, to join the company on Oct. 7, after he leaves his position as CFO of financial software company Misys Ltd. following six months in the role. Raja will also serve as a member of the company’s risk committee, which oversees the risk-management strategy and exposure levels.