Serco plans Â£550m rights issue
Outsourcing giant Serco has revealed plans for a rights issue to raise up to £550m after cutting its annual profit forecast and writing down the value of its business by £1.5bn.
The fundraising will be launched in the first quarter of 2015 following the publication of its audited 2014 financial statements.
It follows a review of the Hook-based company by chief executive Rupert Soames.
In total, Serco said it had identified likely impairments and further onerous contract provisions totalling about £1.5bn.
"The rapid progress we have made in recent weeks on the Strategy Review and the Contract & Balance Sheet Reviews has brought us to the point that we are able to provide an initial estimate of the impairments, write-downs and Onerous Contract Provisions that are likely to be required at year end," said Soames.
"Whilst it is a bitter pill, it is better for all concerned that we swallow it now and establish a really solid foundation on which to build Serco's future."
Hook-based Serco last year agreed to repay about £68.5m to the government for overcharging on contracts to tag criminals in the UK.
It came after allegations Serco and G4S charged the government for tagging people who were either dead or in jail.