It’s no holiday for Thomas Cook as shares hit fresh lows
FEARS over Thomas Cook’s future have leached into corporate bond markets, sending the company’s shares to fresh lows as concerns reverberated about its towering debt pile.
Yields on the company’s listed debt spiked to almost 20pc as the cost of insuring against a Thomas Cook default hit a record high.
Its shares closed down 3.9pc at 22.72p yesterday leaving the 177-yearold company worth £350m. With net debt of £389m, yields on Thomas Cook’s two corporate bonds – due to mature in 2022 and 2023 – rose sharply.
Meanwhile, the price of credit default swaps, which pay out if Thomas Cook is unable to meet its financing obligations, doubled to around 10pc.
Thomas Cook was worth £2.2bn in mid-May, but after issuing three profit warnings in 2018 – two in October and one in November – it has been the subject a huge shareholder sell-off. The company was plunged into a full-blown crisis last week as investors took a dim view about another financial alarm, a bigger than expected debt pile and a suspended dividend.
Thomas Cook is now set to crash out of London’s mid-cap FTSE 250 index later this month.
Berenberg analyst Stuart Gordon labelled Thomas Cook “uninvestable” earlier this week and said the prospect of going to shareholders for cash was “back on the agenda”.
Chief executive Peter Fankhauser and interim chief financial officer Sten Daugaard are desperately trying to calm fears among institutional investors, holding a series of meetings and conference calls. Some of their biggest shareholders were said to be particular aggrieved by the close proximity of the travel giant’s latest two warnings.