It’s no hol­i­day for Thomas Cook as shares hit fresh lows

The Daily Telegraph - Business - - Business - By Oliver Gill

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.

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