Here’s one of several articles about Capita’s profit warning announced today:
Capita shares plunge 35% after outsourcing giant announces shock profit warning and rights issue
New chief executive Jonathan Lewis, who took up the role on 1 December, said “significant change” was needed to get Capita back on track. He said an “immediate priority” was to strengthen the group’s balance sheet, with plans to raise as much as £700m in a rights issue, as well as slashing costs after finding “significant scope” for savings and aims to sell off unprofitable businesses.
Some have the shares dropping by as much as 45%, but this headline caught my eye:
Capita collapse could create bigger headache than Carillion’s demise
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. “If Capita were to fail the ensuing political fallout would make Carillion look like a tea party,” said Michael Hewson, chief market analyst at CMC Markets.
Too big to fail, surely?