Posted by: westlancashirerecord | April 28, 2018

Should We Be Worried About Crapita?

Did you read about Capita , the company our government has used to award 1,000 plus public contracts? Following a pre-tax loss of £515m, Capita raised £701m via a rights issue to help it to recover from a series of reputation-damaging contract bungles and repair its balance sheet.

When it was pointed out in Parliament that the Ministry of Defence and Capita have agreed an improvement plan, Tory MP Mark Francois pointed out the deal “is now known universally in the Army as “Crapita” because of its poor performance on the contract”.

The company, which provides a range of public services from collecting the BBC licence fee to recruiting for the British army, is issuing new shares at 70p each, a 34 per cent discount to the theoretical price that the shares should trade at after the rights issue. The rights issue, which will raise £662m after fees to advisers, will be used to reduce Capita’s £1.2bn net debt, fund the company’s restructuring and invest in new technology.

Out of interest, of the current major central government contracts awarded to Capita, nine were brokered under Labour (20 per cent), 24 under the coalition (53 per cent), and 12 under the current government (27 per cent).

Perhaps what might worry us here in West Lancashire, guess who is our treasury management advisor? Yes, you’ve got it in one. It’s Capita that undertakes reviews of our treasury management activities. If it cocks up OUR treasury management activities like it did to its own, Crapita  will become a household word in West Lancashire, never mind in Parliament!

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