Big­gest Thomas Cook share­holder calls sell-off ‘an over-re­ac­tion’

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

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.

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