(Alliance News) - Montreal-based Garda World Security Corp on Tuesday said it will begin its engagement programme with key G4S PLC shareholders over its GBP3 billion cash offer as G4S itself announced a 10-year GBP300 million prison management contract.
Shares in G4S were up 1.3% at 203.57 pence in London on Tuesday afternoon. Year-to-date, the stock has shed 6.6% in value.
Security services provider G4S had said in September that Garda World's 190p per share cash offer undervalued the company.
Now, Garda World is engaging directly with G4S's shareholders through its Fleming Capital Securities Inc and has heaped further criticism upon G4S's current management.
"G4S's own missteps have driven its share price decline earlier this year, in some instances well before markets reacted to the pandemic. The shares lost 15% the day after the announcement of the Cash Solutions divestiture in February, 23% on the 2019 results release and 17% on the announcement of the dividend suspension," said Garda World.
It noted that around 62p per G4S share, or GBP1.0 billion, of value had been lost die to non-Covid items in the period.
Further, Gard World claimed that G4S's pension deficit has been "highly underestimated" with "serious issues" over the status of G4S's GBP2.7 billion of pension scheme gross liabilities.
Attention was also drawn to G4S's GBP1.6 billion of one-off and restructuring charges since 2013.
"GardaWorld operates in the same areas of business as G4S. It is public knowledge that there are looming liabilities and potentially crippling unresolved lawsuits - especially in North America - the potential impacts of which are difficult to quantify given poor company disclosure," it said.
It added: "The list of liabilities goes on and the potential impacts are significant and rarely well estimated in G4S disclosure as history has demonstrated. Unless G4S is planning further asset sales, or to tap its shareholders for more cash resources, we question how such potential liabilities will be met."
Garda World noted that while its own turnover in the last ten years has grown to CAD3.7 billion, around GBP2.2 billion, from CAD1.1 billion, G4S revenue from continuing operations has fallen to GBP7.0 billion from GBP7.4 billion.
"The very fact that the board is yet to reinstate the dividend despite the net positive impact Covid-19 has had on the security industry speaks volumes about its view of G4S's prospects and cash flow profile," Garda World claimed.
Stephan Cretier, founder and chief executive of GardaWorld, said: "We have said before that the business needs a new owner, not a face-saving change of management or a shake-up of the board. That will not produce the root and branch change to the company's operating practices that is so urgently needed. Only after such a profound operational programme - which will take years, not months - will customers, and the public at large, begin to trust this business to deliver."
Separately, G4S said its UK Care & Rehabilitation business won a contract to operate the new HM Prison Five Wells located in Wellingborough, Northamptonshire. The total revenue over the life of the contract is expected to total approximately GBP300 million.
G4S noted that the "new-generation category C facility will be run with a strong focus on rehabilitation in order to break the cycle of reoffending" and will create around 700 new jobs.
By Anna Farley; annafarley@alliancenews.com
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