Capita’s share price adjusts to mega rights issue
Outsourcing giant Capita's share price was re-based this morning after the firm admitted more than one billion new shares to the market.
The company's shares were trading around 129p at the time of writing, as shareholders made the most of the opportunity to buy three discounted shares for every two they hold. Over the last week, the stock had traded around 200p.
Factoring in the value of nil paid shares, Capita's share price is up around five per cent on a like-for-like basis.
The giant rights issue, which was announced on 23 April, saw new shares sold at 70p per share, a discount of 34 per cent as it attempts to reduce its debt. The move received overwhelming support from shareholders at Capita's AGM yesterday.
On unveiling its plans for the rights issue, the company admitted it made a loss of £513m over the last financial year.
At the time chief executive Jon Lewis said he expected to have the money by the beginning of June. He plans to spend £500m in the next three years in order to achieve the company’s targets of having £200m of cash by 2020 and dramatically improving its margins. A new management team has been in place since March.
“The strategy we’re going to launch today really speaks to a simpler Capita. For the first time we will be running divisions as integrated growth platforms rather than as a conglomerate," Lewis added.
The company said its new, "focused" strategy would enable it to reduce costs of £175m by 2020.