Britain's Serco has announced a rights issue of up to £550m after cutting its profit forecast and taking a £1.5 billion impairment charge, wiping a third off its share price.
The unscheduled announcement, which also included a plan to cancel the dividend, sent the company's shares down as much as 35%.
The strategy and the writedown follow a review by new chief executive Rupert Soames to tackle a string of failed contracts. The cut to the outlook is the fourth such downgrade in 12 months.
With current trading deteriorating, Serco plans to focus on providing government services instead of private contracts. It will sell assets and seek to renegotiate new terms with its lenders.
"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," Soames said in the release.
"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," it added.
Serco runs services in 30 countries but generates almost half its revenue in Britain.
Its reputation was rocked last year when alongside rival G4S it was found to have charged Britain for monitoring criminals who were dead, in prison or never tagged, sparking the exit of its CEO, a fine and a ban on new work that ended in January.
It was forced to raise £170m via a placing in April to help shore up its finances after a collapse in profits.
Serco cut its forecast for 2014 adjusted operating profit by around £20m to a target of between £130-140m. It also cut its 2015 outlook.
