Capita bosses locked in crisis talks with new advisers as they battle to turn the struggling company around
Capita bosses are locked in crisis talks with new advisers as they battle to turn the struggling company around.
The troubled contractor is in discussions with accountants PwC about a fresh plan to overhaul its operations.
Chief executive Jon Lewis is already in the middle of an overhaul that started in 2018. But he has admitted a shake-up is harder and more expensive than anticipated.
Troubled contractor Capita – dubbed ‘Crapita’ in the City – is in discussions with PwC about a fresh plan to overhaul its operations
In March, Capita said the £720million restructuring budget was not enough and it would need another £80million as it swung to a £63million annual loss.
Restructuring has been further derailed by the pandemic, which has slowed down its plans to sell off businesses.
Lewis has now approached several advisory companies for help – though none have yet been hired.
Tough turnaround: Capita boss Jon Lewis
Capita has around 61,000 employees and works in dozens of industries. The firm runs everything from the London congestion charge to collecting the BBC licence fee.
But this wide reach has come at a cost, and after years of acquisitions it put out a string of profit warnings in early 2018.
Lewis, with a reputation as a turnaround specialist, was brought in to rescue it and has raised £700million from shareholders and launched a strategy to sell businesses so it can focus on high-tech and consulting.
But Capita’s complexity has slowed down sales and driven up costs. Robin Speakman, investment analyst at Shore Capital Markets, said Lewis and his team had also realised how little had been invested.
In December it sold an education software business for £400million – far less than many thought it was worth.
It is planning to raise £200million by selling several companies including prestigious property group GL Hearn and its events and translation divisions.
But the process has been put on hold during the pandemic.
Speakman said Capita’s £1billion net debt was another challenge. He said: ‘The restructuring needs to put it in a place where it can self-finance and it can’t do that with the amount of debt it’s been carrying.
‘What emerges from the sales is a much smaller Capita – much less diversified, less of a conglomerate. But it will need to invest in the company.
‘The risk is that the competition doesn’t exactly stand still and it needs to be in a better place than that.’ Capita and PwC declined to comment.