{"id":30501,"date":"2018-02-03T12:06:13","date_gmt":"2018-02-03T17:06:13","guid":{"rendered":"http:\/\/olduvai.ca\/?p=30501"},"modified":"2018-02-03T12:06:13","modified_gmt":"2018-02-03T17:06:13","slug":"crash-of-outsourcing-giant-with-70000-employees-globally-sparks-new-panic","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=30501","title":{"rendered":"Crash of Outsourcing Giant with 70,000 Employees Globally Sparks New Panic"},"content":{"rendered":"
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Crash of Outsourcing Giant with 70,000 Employees Globally Sparks New Panic<\/a><\/h3>\n<\/header>\n
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\u201cNot another Carillion,\u201d says UK government to soothe frazzled nerves, as entire industry is teetering.<\/strong><\/p>\n

Since the sudden downfall of the British infrastructure giant Carillion two weeks ago<\/a>, investors\u2019 nerves in London are frayed. And short-sellers, scanning the horizon for their next prey, seem to\u00a0have found it<\/a>.<\/p>\n

Its name is Capita. It is one of the UK government\u2019s biggest outsourcing firms with\u00a0contracts to provide services to government entities, such as NHS cleaning, school dinners, and prison maintenance. It has 70,000 employees<\/a>\u00a0in the UK, Europe, South Africa, and India.<\/p>\n

On Wednesday, its shares tumbled 47.5% to a 15-year low after its new CEO, Jon Lewis, slashed profit forecasts<\/a>, announced plans to tap the capital market for \u00a3700 million, and suspended a dividend that was worth more than \u00a3200 million to shareholders last year.<\/p>\n

On Thursday, the rout continued , with shares dropping a further 13%. On Friday, shares bounced off a tiny 2.3% to close at 162.3 pence, down 77% from June 2017 and down 88% from July 2015.<\/p>\n

In a desperate bid to calm market nerves at the height of Wednesday\u2019s rout, the UK government released a statement insisting that Capita was \u201cnot another Carillion.\u201d<\/p>\n

But whatever the government might say, there is a striking resemblance between the two companies:<\/strong><\/p>\n

Like Carillion, Capita is massively dependent on government contracts. In the last two years alone it was awarded 226 public sector contracts \u2014 10 times more than Carillion \u2014 making it the biggest supplier of local government services in the country, according to<\/a> public sector data provider Tussel.<\/p>\n

Like Carillion, Capita is massively in debt, with an estimated \u00a31.1 billion of funds outstanding. And like Carillion, it\u2019s been exceptionally generous with its dividend policy in recent years. So did it, as Carillion is accused of doing, borrow money and sell-off assets in order to pay its dividends, in direct contravention of UK law?<\/p>\n

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…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Crash of Outsourcing Giant with 70,000 Employees Globally Sparks New Panic \u201cNot another Carillion,\u201d says UK government to soothe frazzled nerves, as entire industry is teetering. Since the sudden downfall of the British infrastructure giant Carillion two weeks ago, investors\u2019 nerves in London are frayed. And short-sellers, scanning the horizon for their next prey, seem […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18331,18080,5660,18332,6948,4255],"class_list":["post-30501","post","type-post","status-publish","format-standard","hentry","category-economics","tag-capita","tag-carillion","tag-don-quijones","tag-jon-lewis","tag-uk-government","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30501","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30501"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30501\/revisions"}],"predecessor-version":[{"id":30502,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30501\/revisions\/30502"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30501"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30501"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30501"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}