* Aims to raise initial 600 mln stg including via share sale
* Places 140.9 mln shares at 247p
* Plans asset sales that could raise around 250 mln stg
* Aims to cut debt, lift margins, target emerging markets
* Shares close up 2.9 pct
(Recasts with result of placing, adds details)
By Neil Maidment
LONDON, Aug 28 G4S, the world's largest
security services firm, raised 348 million pounds ($541 million)
through a share sale with more to come from asset disposals as
its new boss seeks to cut debt and focus on emerging markets
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 Nick Buckles,
including a failed takeover bid in 2011, a botched contract to
staff the 2012 Olympics and a profit warning in May.
Almanza said he would give a detailed plan in November but
initial measures to raise about 600 million pounds, including
via the share placing, should help it avoid a costly
credit-rating downgrade and improve profit margins.
G4S later said it had sold 140.9 million shares to new and
existing investors at 247 pence each. Joint bookrunners
Citigroup, JPMorgan and Barclays achieved
a premium to Tuesday's closing share price of 245.3p, a rare
feat in share placings showing investor backing for the
The company, which also plans to sell some lower-margin
businesses to help fund expansion in faster-growing markets,
said the placing had the support of its largest shareholder,
Invesco, which had a 15.1 percent stake prior to the placing
according to Thomson Reuters data.
No-one at Invesco could be reached for comment.
"There was strong support from existing investors, but a
substantial amount also went to new people," said a source close
to the deal, adding that most of it went to UK-based investors.
Analyst Mike Allen at brokerage Panmure Gordon welcomed
Almanza's debut announcement as chief executive. "We applaud the
quick work undertaken by management to restructure the group and
shore up the balance sheet," he said.
G4S shares closed 2.9 percent up at 252p. Shares often fall
on the announcement of equity fundraisings, as these cut
earnings per share for investors.
G4S, which runs services from managing prisons to guarding
tennis players at Wimbledon, aims to benefit from a trend among
governments and businesses to outsource security work.
But it has come under pressure as governments in developed
markets cut services. Also the British government is refusing to
award G4S new work pending a review of contracts, after an audit
found it and rival Serco charged for tagging criminals
who were either dead, in prison or never tagged in the first
G4S said its first-half operating profit margin slipped to
5.5 percent from 5.9 percent 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 core earnings (EBITDA) compared with a target of between 2
and 2.5 times.
But G4S, 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.
"G4S has excellent market positions, particularly in
developing markets, and as a result of which we have very
material growth opportunities," Almanza said, ruling out more
radical suggestions like spinning off G4S's cash security unit.
G4S, which leads rival Sweden's Securitas by
sales, also said the sale of businesses, likely to be in
developed markets, could raise up to 250 million pounds in the
next year and that it would restructure other units in a group
which spans 125 countries in order to improve margins.
On Wednesday - and included in the asset sale total - G4S
said it had agreed to sell its Canadian cash security and
Colombia Data solutions businesses for 100 million pounds. The
sale of its U.S. businesses was ongoing, it added.
G4S said it had taken a one-off charge of 180 million pounds
following a review of its assets and that it had started
restructuring programmes - including cutting staff numbers and
ending some lower-margin services - in Britain, Ireland and
Europe at a cost of 30 to 35 million pounds over 2013 and 2014.
It declined to give an operating margin target.
Almanza's arrival is part of a major management overhaul
since the furore over the Olympics contract, when G4S failed to
provide enough security staff, with a chief operating officer
appointed to assess risk, UK bosses replaced, and Himanshu Raja
recruited as finance chief from software firm Misys.
G4S, whose shareholder roster also includes activist
investor Cevian Capital and Microsoft co-founder Bill Gates,
said it made a first-half operating profit of 201 million
pounds, little changed from a restated 202 million the same time
last year, with turnover up 7.2 percent to 3.65 billion.
($1 = 0.6435 British pounds)
(Additional reporting by Rhys Jones and Kylie MacLellan;
editing by Mark Potter and Louise Heavens)