Thomas Cook had £3.1bn hole in balance sheet before collapse
Thomas Cook’s chief executive has revealed the travel company had a balance sheet black hole of more than £3.1bn before its collapse on Monday.
In a witness statement to the high court, Peter Fankhauser also said the company had received seven non-binding offers for parts of its business under a strategic review, all of which were rejected by Thomas Cook’s board and lenders.
The company received five offers for its airline operation and one for a sale of the tour operator from Fosun, Thomas Cook’s largest shareholder. An offer was also received for its Nordic business, “which was followed by a fully financed offer at a later stage”.
Fankhauser added: “Following careful consideration by the board and in consultation with the lenders, the board decided not to pursue any of the bids.
“None of the bids were likely to realise sufficient value and following the disposal of any individual business division, the capital structure of the remaining group was unlikely to be sustainable. It would therefore not have been commercially justifiable.”
Thomas Cook was also approached at the start of August by the Turkish operator Anex Tour Group, which had built up an 8% stake. However, talks between Annex and Fosun failed to lead to a deal.
The witness statement laid bare the parlous state of Thomas Cook’s finances, with cash outflows that included £388m due to hotel partners and £272m to other external suppliers.
As the situation worsened at the company, payment service providers including American Express, UniCredit and Barclaycard moved to protect themselves from potential losses in the case of a collapse.
Fankhauser said: “[They] took steps to mitigate their financial exposure to the group, such as by withholding cash collections and cancelling the payment services which they provide to the group.
“These actions further demonstrated that the company’s stakeholders were beginning to take steps that negatively impacted the company’s liquidity and financial position.”