Could Capita be the new Carillion?

Extracts from an article by The Week.

“The government contractor Capita’s decision to launch a drastic rescue plan has led to fears it could follow Carillion into liquidation, leading to fresh doubts about the integrity of government outsourcing.

In light of last week’s collapse of Carillion under a mountain of debt and with an estimated pension deficit of up to £990m, Capita’s shares fell by almost a half yesterday after its chief executive “slashed profit forecasts, announced plans to tap the market for £700m of investment and suspended a dividend that was worth more than £200m to shareholders last year”, says The Guardian.

The company provides services to the public sector, running London’s congestion charge scheme, call centres for Jobseekers’ Allowance, teachers’ pensions and an electronic monitoring service for prisoners. It also helps local authorities collect council tax.

Despite having a net debt in excess of £1.1bn and a pension deficit of £380m, Capita won 154 government contracts last year, according to Tussell, which analyses UK public sector contracts.”

Read the full article on The Week website.

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