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| Serco seeks to raise £550m as it cuts profit forecast | Serco seeks to raise £550m as it cuts profit forecast |
| (35 minutes later) | |
| Outsourcing firm Serco plans to raise up to £550m through selling new shares via a rights issue and has cut its profit forecast for this year and next. | Outsourcing firm Serco plans to raise up to £550m through selling new shares via a rights issue and has cut its profit forecast for this year and next. |
| It also expects to write off £1.5bn connected to losses on contracts. | It also expects to write off £1.5bn connected to losses on contracts. |
| The move follows a review after a series of failed contracts including a scandal over tagging criminals. | The move follows a review after a series of failed contracts including a scandal over tagging criminals. |
| Last year, Serco was banned from UK government contracts for six months after it was accused of tagging people who were either dead or in jail. | Last year, Serco was banned from UK government contracts for six months after it was accused of tagging people who were either dead or in jail. |
| "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," said Serco chief executive Rupert 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," said Serco chief executive Rupert Soames. |
| Shares plunged 30% to 219.50p in early trading. | |
| Mr Soames, who was formerly chief executive of engineering firm Aggreko, took over as Serco boss in May. | Mr Soames, who was formerly chief executive of engineering firm Aggreko, took over as Serco boss in May. |
| As a result of the changes, Serco said it would hold discussions with its lenders to negotiate changes to the terms of its loan facilities. | As a result of the changes, Serco said it would hold discussions with its lenders to negotiate changes to the terms of its loan facilities. |
| The company said its forecast for operating profit in 2014 profit had been cut by about £20m to £130m-£140m, and it had also reduced its outlook for 2015. | The company said its forecast for operating profit in 2014 profit had been cut by about £20m to £130m-£140m, and it had also reduced its outlook for 2015. |
| It said a plan to sell off businesses which were not core to its future plans was already underway. | It said a plan to sell off businesses which were not core to its future plans was already underway. |
| Serco said the review, which is still continuing, had clarified its future direction and meant from now on it would concentrate on its role as a public services supplier. | Serco said the review, which is still continuing, had clarified its future direction and meant from now on it would concentrate on its role as a public services supplier. |
| "There are a tough couple of years ahead as we make this transition, but it will be worth it," added Mr Soames. | "There are a tough couple of years ahead as we make this transition, but it will be worth it," added Mr Soames. |