Capita (LON:CPI) shares fell nearly 40 percent on Wednesday, after announcing plans for a rights issue to raise £700 million to negate a fall in profits.

The outsourcing company warned that 2018 underlying pretax profit was expected to be between £270 million and £300 million, after saying that it did “not expect to offset the above headwinds through the full year benefit of last year’s cost actions and new business”.

It said that the divisional plans indicate that there is “likely to be a significant negative impact upon profits’ from contract and volume attrition, the dropping out of one-off items including contract and supplier-related profits.”

Jonathan Lewis, Chief Executive Officer of Capita, said:

“Firstly, we are pursuing “self-help” options, including the aforementioned cost actions and non-core disposals.

“Secondly, the Board is not recommending the payment of a final dividend. Finally, the Board is planning to raise equity by way of a rights issue during this year.’

“The precise quantum has yet to be determined and the Company has entered into a standby underwriting agreement for up to £700 million with Citi Global Markets Limited and Goldman Sachs International.”

This comes just after the collapse of competitor Carillion, which has endangered the jobs of thousands of workers.

Capita shares are currently trading down 38.27 percent at 214.70 (0855GMT).