Thomas Cook gets nod to shelve buyback plan

Thomas Cook India has been given the green light to withdraw its buyback offer owing to the severe impact of the pandemic on its financial condition.

In February 2020, the Thomas Cook India board had agreed to carry out a ~150-crore share repurchase programme. However, before the firm could commence the buyback, its financial situation underwent severe deterioration following the lockdown and halt in travel-related activity.

The company approached Sebi, seeking withdrawal of the buyback citing huge cash burn during the June 2020 quarter.

In an order issued on Thursday, Sebi said that if Thomas Cook was compelled to carry out the buyback, it would “result in an adverse effect on the business of the company and, in turn, its shareholders. While treating this as a unique case, I am inclined to exercise the powers under Regulation 28(i)(b) read with Regulation 28(iv) of the Buy–back Regulations, 2018, and allow the request for withdrawal”.

“At this stage, it cannot be disputed that the pandemic has now made it impossible for Thomas Cook to go ahead with the buyback offer. Further, such impossibility had occurred without any fault of the company and was beyond its control,” it stated. In its submission to Sebi, the firm said its reported cash and bank deposits had dropped by ~146 crore to ~245 crore in Q1FY21.

Thomas Cook further submitted to Sebi that if directed to complete the buyback, “it would not be in a position to spare any cash, and the viability and continuity of the company as a going concern may be severely threatened on account of the company’s financial position, having undergone substantial deterioration due to the Covid-19 pandemic.”