Thomas Cook suffers shares fall14/05/2012 - 11:22:27
Thomas Cook’s warning that it is in danger of collapse if shareholders fail to back two planned disposals wiped 10% from its share price today.
Its warning came as one analyst said the recent poor performance of its shares, which have slumped 90% over the past 18 months, showed the City believes there is a one in three chance of it failing.
The tour operator posted documents to shareholders over the weekend in which it explained the financial importance of the planned sale and leaseback of part of its aircraft fleet and the disposal of five Spanish hotels.
Failure to support the fundraising move would jeopardise the company’s recent £1.4 billion deal with lenders, including Royal Bank of Scotland and Barclays, to extend the maturity of its bank loans to 2015.
The deal has been hailed as a key step in strengthening confidence in the holidays firm, which came close to collapse last year.
Thomas said it was confident that shareholders will deliver the required majority when they vote on the disposals at a general meeting in London on May 29.
Douglas McNeill, an analyst at Charles Stanley Securities, said: “To our way of thinking, the share price indicates that the probability of insolvency is over 35% – and we find that too pessimistic.
“Since shareholder approval seems unlikely to be withheld, this would seem to be something of an academic issue.”
The 10% fall in its share price today left the company’s value at £166.7 million.
In this weekend’s circular it confirmed losses of £262.7 million for the winter and said the particularly poor performance of its North American and French businesses contributed to the bigger half-year loss.
Bookings for the second half have been more encouraging but Thomas Cook said much will now depend on how it performs in the important “lates” market.
The company was plunged into crisis in November after it went back to its lenders to ask for an additional £100 million lifeline, sparking fears of a collapse, but it is now hopeful that it has a platform for recovery.
Its turnaround plan for the UK business includes focusing on fewer and better-quality hotels and a drive for more online bookings.
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