Capita rights issue raises £681m for turnaround

CAPITA has raised £681m through a rights issue with almost all its investors backing its plan to pay down debt and plug its pension deficit.

The company announced plans to raise £701m through a rights issue in April as part of an ambitious turnaround strategy.

The issue of one billion new shares at 70p each closed on Thursday, with over 97pc of shareholders taking up the discounted offer.

They began trading on the London Stock Exchange yesterday.

The company’s pre-tax losses spiralled to £513.1m in 2017, from a loss of £89.8m the year before, and it racked up £1.2bn of debt. New boss Jon Lewis said he planned to spend £500m in the next three years to achieve the company’s targets of having £200m of cash by 2020 and dramatically improving its margins. He will focus on five sectors, rather than the current 40, as part of a strategy to cut costs by £175m. He has warned that putting the business back on an even keel could take up to two years.

Christopher Bamberry, of Peel Hunt, said the move had placed the business on a “sound financial footing” ahead of a “long restructuring process”.

He added: “There is substantial execution risk in delivering a transformation programme of such scale in challenging market conditions. And at this juncture, there is insufficient granularity with regard to the path to achieving the 2020 margin target.”

Shares in the company closed up 10.5p at 146.9p, a rise of 7.7pc.