Shareholders in troubled outsourcing firm Serco will vote today on a proposed rights issue, aimed at raising £550m.
The company’s shares dipped by over 30 per cent in the hours following the announcement of its plans in November, which came along with a profit warning for 2014. Serco stated at the time that it would use the money from the share sale to help reduce the group’s debt.
The firm has had a difficult few years, starting in 2013 when a review found it had charged the government for electronically tagging criminals who were either dead, in prison, had left the country or had never been tagged.
Since then, it has made several profit warnings, and in its most recent results, the company posted a decline in revenue, from £4.28bn to £3.95bn. The firm also swung to an operating loss of £1.35bn in 2014, down from an operating profit of £146m in 2013. The group did not pay a dividend for last year in a bid to bring down the debt.
Rupert Soames, Serco’s group chief executive, said at the time of the results that the company had the sense of “having confessed our sins” and “taking the punishment”.
“We are now ready to start on the path to recovery,” he added.
Last month, reports emerged that the company was attracting the attention of short-sellers, who were expecting more bad news to come out of the business. The share price has struggled in recent weeks, and on Friday last week finished down by 3.39 per cent.
Serco declined to comment yesterday.