Biggest Thomas Cook shareholder calls sell-off ‘an over-reaction’
THOMAS COOK’S biggest shareholder has come out fighting for the 177-yearold travel giant, describing a stock market sell-off as “an overreaction”.
As fears grew over the company’s future, Invesco insisted that Thomas Cook’s “fundamentals remain robust”.
Almost 60pc was wiped off the company’s market value in eight days after it announced its second profit warning in two months, suspended dividends and said it had opened talks with its lenders over its burgeoning debt pile.
But Stephen Anness, Invesco global equities fund manager, said: “Much of what we heard from Thomas Cook last week was a repeat from what we already knew – that trading suffered from the exceptionally hot summer. That was exaggerated by the unexpected change to accounting, a change we very much approve of as it more clearly reflects the underlying business.”
The accounting change saw a series of “separately disclosed items” included in underlying earnings, skewing prior year comparatives.
Mr Anness added: “The market has taken fright but from what we see, the fundamentals remain robust. From our conversations with the company, the balance sheet and liquidity is intact. This seems an overreaction.”
Invesco owns a 14pc stake in Thomas Cook, according to Bloomberg.
Thomas Cook shares rose sharply on Wednesday morning, climbing by around a fifth.
Arresting multiple days of decline will come as a relief to Peter Fankhauser, the chief executive, and Sten Daugaard, the interim chief financial officer, who have spent the week trying to calm institutional investors in meetings and conference calls.
The company’s woes bled into debt markets on Tuesday. Corporate bond yields rose sharply and the cost of insuring against a Thomas Cook default hit record highs.
The corporate bond sell-off came after equity markets were spooked on Monday by analyst remarks that the company had become “uninvestable” and that it may have to launch a rights issue.
Mr Fankhauser last week rejected suggestions that Thomas Cook was facing an imminent debt crisis, insisting that it would not breach banking terms. The company had “engaged with our lending banks to get continued support”, he said.