Markets nervous ahead of Capita finals, is it ‘the next Carillion’?

Extracts from an article by Proactive Investors.

"Capita Plc posts its finals on Thursday amid concerns it could face a similar – if not worse – fate than collapsed contractor Carillion.

Last month the outsourcer issued a profit warning and announced plans for a £700mln rights issue and to scrap its dividend.

Jonathan Lewis, who started as Capita’s chief executive two months ago, said the company was “too complex” and “too widely spread across multiple markets and services” so needed to sell non-core parts of the business. Capita plans to use the proceeds of asset disposals to pay down net debt, which stands at £1.15bn.

The announcement came in the wake of the collapse of fellow contractor Carillion earlier this month.

A potential collapse of Capita could create an even more of a headache for the public sector than Carillion since it is the biggest supplier of local government services in the UK, according to Tussell data."

Read the full article on the Proactive Investors websites.

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