We are only just in the process of voting for the 3 new ordinary shares for every 2. Vote is just a formality as part of this reset and change in direction that will happen. I may take it up, I don't know yet. Hoping for an AA type of reversal and I am willing to wait as anyone in boat should be. Some very good businesses in here despite being known as Crapita recently.
Insolvency is an inability to pay debts as they fall due. Capita can so it's not insolvent and the position is improved in any case by not paying a dividend and the rights issue.
Beyond that you either buy into the turn around story or you don't but it ain't going to do a Carillion.
Capita in my honest opinion started going in the right direction. it is supported by big banks and they are not fool. The directors also bought a lot of shares, that gives confidence.
Stay calm and hope for the better.
It means the shareholders have negative equity. Capita is technically insolvent and will need to raise cash from a rights issue which will dilute your holdings, and sell businesses which will reduce the debt
All these big service outsourcing companies are effectively bust because of decades of low or negative profit and over indebtedness.
Where Carillion led, others will follow.
Gordon Brown was to blame with his crazy outsourcing strategy.
I find the flurry of activity here rather amusing. Few caught short from perhaps the advice of their mates in the city who also bet short. So keep the sell warnings coming as like all investing in any individual stock you really don't know the direction, however this is a reset (See The AA for example, core business good).
As for me selling, well its way too late for me. I added yesterday to average down but happy to take what I can on any recovery upwards.
They only pay out if the strategy succeeds under the performance conditions bit.
I'm not a huge fan of large amounts of nil cost share options as it encourages inflexible greed driven behavoir . Ie mgt will literally do anything to meet the performance conditions even if it damages the company.
The CEO claims that the company is 'fundamentally strong'. How on earth has he come up with that conclusion? I would say all the fundamentals are showing me that this is fundamentally in a very dire situation.
Loss before tax - £513m
Net debt - £1.1bn
Pension deficit - £407m
Today's announcement seems to be well received particularly the bit about trading for the the qtr in line with guidance. Suspect this is as good a recovery play as it gets.
The new man seems to have a well thought out plan too.
No one can predict the share price to any level of certainty. But what I do know is there is more than enough good businesses here for a recovery play and picking the bottom is impossible. Hopefully, we are thereabouts. The volume has certainly calmed down.
Britain's Capita will publish a five-year transformation plan and details of a rights issue with its annual results on April 26, a person familiar with the matter said, giving the services group a clean slate after a raft of profit warnings.
Capita, which handles services for companies and governments such as HR, recruitment and customer services to help them save costs, confirmed the results date and strategy update on its website on Wednesday morning.
Chief Executive Jonathan Lewis, on board since December, aims to simplify and unify an unwieldy structure in which more than 250 different business units have operated "like separate silos," the source told Reuters late on Tuesday.
Capita will publish results with the overhaul plan aimed at paying down debt, giving markets a clear basis on which to invest, the source said.
Lewis sees potential in the fact Capita is only selling more than one service to just 4 percent of its customers, and cost-savings potential in implementing an overarching structure which was lacking up to now................................"
I wonder if the outcome of the funding will be the "reset" moment in CPI. I wonder if then this would a good time to average down yet...
It is disappointing UK economy is growing too slow for my liking but interesting that FT reports that Capita plans to cut reliance on UK market:
Everything in the article and regarding selling off assets are looking up beat.
I presume the 2 major drags on the share price are:
2. Funding (notably selling off assets cheap because of Brexit)
I also wounder where the growth will come from. Will Capita put a stop to growth through acquisition? If so Capita will need to grow the hard way, through profits in a sector where margins are somewhat fixed to a narrow range.
Or will growth in the share price come from re-instating the dividend in a couple of years? The dividend cut must surely result in some very good profits after restructuring costs?
"The embattled outsourcing giant Capita is plotting a £700m fire sale of assets alongside a heavily discounted rights issue intended to raise a similar sum.
The new chief executive of the former FTSE 100 favourite is understood to be working on a more aggressive than expected review that could lead to the sale of six or seven businesses.
Jonathan Lewis, who overhauled the oil services company Amec Foster Wheeler, admitted in January that Capita needed a rescue cash call.
Delivering a profit warning that almost halved the market value to £1.1bn, Lewis said Capita had underinvested and relied on acquisitions to fuel growth.
The company has contracts ranging from army recruitment to customer services for Tesco Mobile. It is wrestling with a debt pile that totalled £1.2bn at the end of last year and a reported £381m pension deficit...................
"Lewis said in January that two businesses would be sold Constructionline and ParkingEye as part of non-core disposals. It is understood Capita has now identified six or seven businesses, worth up to £700m, that could be sold in stages. With the rights issue, this would allow Capita to raise up to £1.4bn of fresh capital. The company has had more than 120 approaches from potential bidders interested in its offshoots.................
"Lewis has insisted Capita is not in the same position as Carillion, pointing out it has £1bn of cash and bank facilities. Its shares closed last week at 168p. A year ago they were trading at 518.6p...."
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