No Security for G4S
LONDON -- G4S (ISE: GFS.L) fell to a six-month low of 250.6 pence at one point this morning, following news that its recent difficulties in processing applicants for security jobs at the 2012 Olympic and Paralympic Games could result in the company incurring costs of up to 50 million pounds.
Last week, G4S announced that it wouldn't be able to deliver the 10,400 security guards it had promised, resulting in the call-up of 3,500 military personnel to fill the shortfall, the costs of which G4S has now underwritten.
In a statement this morning, chief executive Nick Buckles said:
We are deeply disappointed that we have not been able to fully deliver against our contract with LOCOG and that it has been necessary to call upon the additional military personnel. In partnership with the military and LOCOG, we are working flat out around the clock to resolve the situation. We are determined that together we will deliver a successful and secure Games. I would like to thank the members of the current security workforce who are already on the ground securing many of the Olympic sites across the country.
Later this week, Buckles faces an appearance before a parliamentary subcommittee to explain his company's failure to deliver on the contract. Speculation is that it could be closely followed by his resignation, which could further damage G4S' longer-term prospects of winning major contracts.
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The article No Security for G4S originally appeared on Fool.com.Jon Wallis doesn't own shares in G4S.The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.