Thomas Cook shares in further nosedive
THOMAS Cook battled to reassure the City that it is not heading for another financial crunch, as more investors bailed out and the shares were marked down by another fifth.
Chief executive Peter Fankhauser sought to calm nerves in private talks with institutions already nursing heavy losses from last week, when Thomas Cook shocked the market with an early profit warning. The shares nevertheless fell by more than 21pc to 23.64p yesterday, their lowest level since 2012, shortly before Thomas Cook was forced to call on shareholders for cash in a rights issue to repair its tattered balance sheet.
It means shares in the world’s first tour operator are down by more than four fifths in 2018 and by more than half in the last week alone. Thomas Cook has told shareholders that despite its struggles this year as a result of Britain’s scorching summer, it has the financial strength to navigate the lean winter months. Last week it scrapped its dividend, worth £9m, and said it has headroom for covenant tests.
The consortium of 17 lenders behind Thomas Cook’s £1.4bn debt pile has waived covenant tests for the next two quarters based on support for its updated business plan, agreed following an earlier profit warning in September. Mr Fankhauser is campaigning against the bearish views of the broker Berenberg, which last week branded Thomas Cook “uninvestable” and warned of the risk that another rights issue was “on the agenda”.
The company’s decision not to provide performance guidance for the new financial year compounded fears that Brexit or more instability in package holiday destinations such as Turkey could tip it into a new crisis.
The tour operator has told analysts it does not face a shortage of liquidity as it did prior to its 2012 rights issue.
Peter Fankhauser, CEO, sought to calm nerves in investor talks