UPDATE 1-Blackwater seeks cash, but Cerberus deal ends

(Recasts to include Blackwater strategy)

NEW YORK, May 1 (Reuters) - Blackwater Worldwide, the controversial private security firm that guards U.S. State Department personnel, said this week it continues to pursue financing options even though recent talks with Cerberus Capital Management fell apart.

"We have had two successive quarters of unprecedented growth," Gary Jackson, Blackwater's president, told employees in a note this week obtained by Reuters. "As such, we are exploring multiple avenues to finance our continued expansion."

The company had been in preliminary talks with Cerberus for a possible investment, both companies acknowledged after news reports came out yesterday. Cerberus had considered putting up more than $200 million for a stake in Blackwater, two sources familiar with the plan said.

"We have made a decision not to pursue a transaction with Blackwater," said Peter Duda, a Cerberus representative. He declined to disclose further details about the transaction that it had considered, including its possible size.

Blackwater, which guards U.S. government personnel in Iraq and elsewhere, faced heavy criticism and an FBI investigation over the killing of 17 Iraqi civilians in a crowded Baghdad square last September.

But the State Department last month renewed the Blackwater contract in Iraq for a year while authorities investigate the incident, a move that prompted harsh criticism by the Iraqi government.

Anne Tyrrell, a Blackwater spokeswoman, declined to comment on the company's growth strategy, such as whether it plans to go public in the future or be acquired by a private equity firm like Cerberus.

"We are continually growing, and with it, we are always exploring multiple avenues to continue that expansion," said Tyrrell.