G4S In £600m Fundraising Drive To Avoid Ratings Downgrade

Why Is G4S Rushing To Raise £600m?
A G4S Plc logo sits on a sign outside the entrance to the company's headquarters in Crawley, U.K., on Friday, July 12, 2013. Chief Executive Officer of G4S Ashley Almanza has asked shareholders about a rights issue, according to a report in Britain's Sunday Times newspaper. Photographer: Chris Ratcliffe/Bloomberg via Getty Images
A G4S Plc logo sits on a sign outside the entrance to the company's headquarters in Crawley, U.K., on Friday, July 12, 2013. Chief Executive Officer of G4S Ashley Almanza has asked shareholders about a rights issue, according to a report in Britain's Sunday Times newspaper. Photographer: Chris Ratcliffe/Bloomberg via Getty Images
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G4S, the private security giant, rushed to raise nearly £600 million in by selling shares and businesses in a major push to ward off a ratings downgrade and manage its debts.

The company, which came under fire last year for its Olympic security failure and more recently after an overcharging scandal for tagging offenders, is selling new shares worth around £350 million and offloading businesses to a total of £250 million.

The 620,000 strong firm said it would restructure under plans to deal with a near £2 billion debt mountain.

The firm slipped to half-year pre-tax losses of £87 million for the first six months, after profits of £48 million a year earlier were wiped out by a £180 million writedown of assets and liabilities.

New G4S CEO Ashley Almanza said the firm needed to improve its balance sheet as he announced a sale of around 141 million new shares, equivalent to 10% of its existing equity base.

G4S warned a ratings downgrade could add up to £30 million a year to its debt costs.

The firm is selling a Canadian cash solutions business and a US data storage company for a total £100 million, which combined with other announced US sales and imminent deals will get a total £250 million.

Almanza said: "We need to strengthen our balance sheet to be able to realise the group's opportunity for substantial value creation.

"2013 will be a year of consolidation for the group with the actions we are now taking starting to deliver tangible benefits during 2014."

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