Ashley Almanza, the new chief executive of the security giant G4S, attempted to put its Olympic and electronic tagging woes behind it today by announcing plans to raise £550m through a share placing and sales of non-core businesses.
Mr Almanza, who launched a strategic review when he arrived at the start of June, said: "We need to strengthen our balance sheet to be able to realise the group's opportunity for substantial value creation. 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."
And, in what some analysts privately called a "kitchen sink job", Mr Almanza took massive writedowns on the value of businesses and contracts totalling £180m, which pushed the group into a first-half loss of £87m. Profit before interest, tax and amortisation was flat at £202m.
Last year G4S was hit by £80m of losses stemming from its inability to fulfil its Olympics security contract, and this year it was accused of overcharging for electronic tagging.
G4S placed 141 million new shares today at 247p a piece to raise £348m. Unusually for such placings the share price actually rose on the day, up 7.1p to 252.4p.
Mike Allen at Panmure Gordon welcomed Mr 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," the analyst.
G4S also announced the sale of a Colombian and Canadian business for a total of £100m, and plans to sell other businesses, including its US Government Solutions arm, for a further £250m.
Mr Almanza highlighted the fact that without the fundraising and sell-offs, G4S was in danger of having its credit rating downgraded. That, he said, could increase its borrowing costs by up to £30m a year.
"In the near term, 2013 will be a year of consolidation for the group with the actions we are now taking starting to deliver tangible benefits during 2014," he said.