Thomas Cook financial woes
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Thomas Cook financial woes
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Thomas Cook has delayed the announcement of its financial results because of a “deterioration of trading” in the last few weeks and is in talks with its banks to ensure it has enough cash to see it through the rest of the year.
To me, that does not sound too good!
To me, that does not sound too good!
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It doesnt sound good (I think they have an $800mn credit facility and a $100mn+ loan as per news reports).
At $122mn market cap it does seem small but i cant see who would come in and buy it as they have to take on the debt.
One news report talked of a collapse of bookings in France, Belgium and Russia (another talked of Egypt crisis is to blame on low winter bookings).
It would be interesting to understand how the UK/Germany is doing - surely its two biggest markets and Scandinavia too - also what impact the recent merging of its uk retail business with Co-op had on its debt pile.
I just cant see it being bought out fully (maybe they may sell of some group companies or pull out of a market) and i cant see it going under, companies often extend / re-negotiate their debt but i do see some sort of restructuring needed to its operations - hopefully with minimal impact on the hardworking employees
I think TUI's shares also dropped in value due to Thomas Cooks dropping today too.
At $122mn market cap it does seem small but i cant see who would come in and buy it as they have to take on the debt.
One news report talked of a collapse of bookings in France, Belgium and Russia (another talked of Egypt crisis is to blame on low winter bookings).
It would be interesting to understand how the UK/Germany is doing - surely its two biggest markets and Scandinavia too - also what impact the recent merging of its uk retail business with Co-op had on its debt pile.
I just cant see it being bought out fully (maybe they may sell of some group companies or pull out of a market) and i cant see it going under, companies often extend / re-negotiate their debt but i do see some sort of restructuring needed to its operations - hopefully with minimal impact on the hardworking employees
I think TUI's shares also dropped in value due to Thomas Cooks dropping today too.
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The share price drop this morning does seem a little overdone, but from the markets point of view it is currently without a CEO, the last one was sacked in August ( long overdue by all accounts), it is busily reducing its fleet size, its locked in a redundancy argument with its cabin crews and now its not publishing its accounts. Its back office arrangements appear haphazard and some of its European offshoots just bleed money.
The price drop probably reflects the fears the markets have had for some time regarding this firm and this latest refinancing requirement is the proverbial straw.
Whilst no one is too big to fail, its an iconic brand going very cheap. Lets hope for the best, the airline crews are fantastic..Great people. Good luck
The price drop probably reflects the fears the markets have had for some time regarding this firm and this latest refinancing requirement is the proverbial straw.
Whilst no one is too big to fail, its an iconic brand going very cheap. Lets hope for the best, the airline crews are fantastic..Great people. Good luck
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Thomas Cook don't have a 6% share in NATS though. They are part of an airline consortium who between them own the 6%. Their share is not open to trade in the open market and could only be sold to someone else in the consortium, and requires approval from the Government. Whether any of the other airlines have the appetite, or the spare cash, remains to be seen. It's certainly not a quick hit to help them out of the mire.
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I dont see it has an over reaction, its price target has also been dropped to 10p from 42p. Over the last year its share price has dropped from 205 down to just under 10p this morning, 95% in less than 12 months. So this morning share holders got this bad news, and thought sod it im going to cut my loss, or buy more and average down.
My concern is what is this doing for Consumer Confidence? The extra funding should of be sorted months ago. I can only guess from needing the extra funds that forward bookings are low.
Also was it wise to give such a good dividend, 10.75?
fr-
My concern is what is this doing for Consumer Confidence? The extra funding should of be sorted months ago. I can only guess from needing the extra funds that forward bookings are low.
Also was it wise to give such a good dividend, 10.75?
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I can't see the banks chucking more money at them. How will it get/look any better for next year? In the UK Thomson, Monarch, Jet2, EZY & RYR etc I'm sure fill in some of the gaps if TCX go under? The shorthaul market is dead for the old travel company airlines. It will be a sad day if they do go. Very grim times ahead for all I think?
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Everyone is far too simplistic.
Thomas Cook is FAR more than just Thomas Cook Airlines, or a UK tour operator.
It has far reaching, tangled, tentacle like reaches and these have got badly wound up in Russia, France, Belgium and all sorts of other exotic markets.
We are in the middle of a perfect storm, and this is just the beginning. Unfortunately, Thomas Cook will not survive this in its current shape.
The only options are:
1) A trade sale and subsequent asset strip;
2) A debt for equity swap (Banks lend more money to repay debt, but assume a MASSIVE equity holding in the company in return thereby wiping out the remaining value for remaining shareholders), or;
3) It is bankrupt.
And seeing as the banks have no money, or appetite for increased lending, I'd say the writing is on the wall.
In my view, it is 1/3 on option 1 and 2/3 on option 3.
Very sad indeed.
Thomas Cook is FAR more than just Thomas Cook Airlines, or a UK tour operator.
It has far reaching, tangled, tentacle like reaches and these have got badly wound up in Russia, France, Belgium and all sorts of other exotic markets.
We are in the middle of a perfect storm, and this is just the beginning. Unfortunately, Thomas Cook will not survive this in its current shape.
The only options are:
1) A trade sale and subsequent asset strip;
2) A debt for equity swap (Banks lend more money to repay debt, but assume a MASSIVE equity holding in the company in return thereby wiping out the remaining value for remaining shareholders), or;
3) It is bankrupt.
And seeing as the banks have no money, or appetite for increased lending, I'd say the writing is on the wall.
In my view, it is 1/3 on option 1 and 2/3 on option 3.
Very sad indeed.
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Very smart sky9, but I was trying to present likelihoods for 2 scenarios from 3.
I did infer that i think option 2 to be unlikely.
Therefore, I could have bet the house on it, as the "book" is not covered.
However, on hindsight, I actually think it is more likely to be bought by trade than be bankrupt. At least I hope so.
Good luck to everyone there. I enjoyed my 6 years in TCX.
I did infer that i think option 2 to be unlikely.
Therefore, I could have bet the house on it, as the "book" is not covered.
However, on hindsight, I actually think it is more likely to be bought by trade than be bankrupt. At least I hope so.
Good luck to everyone there. I enjoyed my 6 years in TCX.
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It makes me so mad how the Media can be allowed to report the way they do, I have no link to Thomas cook or its group infact I have only ever booked one holiday with them but what gets me is how can the media show footage of thomas cook check-in desks saying closed and talk about people getting refunds through Abta if things go wrong...
THIS IS DEATH BY MEDIA !!!
!!!
THIS IS DEATH BY MEDIA !!!
!!!
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Sure the media made their share price drop 95%, Sure the media made the banks reconsider lending 100 million to a company that has a Market Capitalisation less then that and already owes them a multiple of that. They owe 900 mill, want to borrow another 100 and as of today are only worth 90 mill, you do the sums. Even at the start of today, they only had a market capitalisation of less then half the money they owe.
TCG is only going to survive if the banks are willing to throw good money after bad and in the current climate that is not going to happen. So the Company either gets stripped of its assets or goes into administration.
The last thing the directors want to do now is trade knowingly insolvent. Let's see when the delayed financial report comes out and see how bad they are really doing, we only know of the tip of the iceberg.
TCG is only going to survive if the banks are willing to throw good money after bad and in the current climate that is not going to happen. So the Company either gets stripped of its assets or goes into administration.
The last thing the directors want to do now is trade knowingly insolvent. Let's see when the delayed financial report comes out and see how bad they are really doing, we only know of the tip of the iceberg.
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THIS IS DEATH BY MEDIA
Narrow Runway, I think that Sky9 was referring to my modest investment. (Or am I being a tad narcissistic?)
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Thomas Cook - On the Ropes!
Let's hope they sort there problems out soon!
Extract taken from today's Guardian:
Thomas Cook: from net cash to debt crisis in four years! Thomas Cook under Manny Fontenla-Novoa shot itself in the foot with an appallingly timed share buy-back and acquisitions
'Here's a startling fact about Thomas Cook: in September 2007, the company had cash of £394m. Today it finds itself begging its banks for an extra £100m to add to a debt that was about £900m in September this year and could reach £1.5bn by the end of December as seasonal outflows hit. What happened?
The rise and rise of budget airlines and the growth of Expedia and other online travel agents didn't help, as is well known. Less appreciated is the extent to which Thomas Cook, under chief executive Manny Fontenla-Novoa, shot itself in the foot via an appallingly timed share buy-back and an acquisition spree.
The annual report for 2008 records the buy-back: 120m shares bought at an average price of 241p each between March and October of that year at a cost of £290m. For the same sum today, you could buy all Thomas Cook's shares three times over.
On the acquisition front, Fontenla-Novoa was busy looking for "opportunities that can accelerate our journey by capturing growth and value through mergers and acquisitions," as the 2010 annual report put it. A flurry of deals in 2008 brought in Jet Tours (£56m), Canada's TriWest Travel (£57m), Hotels4U (£22m) and Gold Medal (in two batches: £25m plus £47m). Öger, a German operator, arrived for €30m (£25.9m) in 2010.
All the while, Thomas Cook was spending heavily internally. Last year's annual report showed a jump from £79m to £266m in net expenditure on fixed assets and intangibles. Some £66m alone was to buy two aircraft which had previously been leased. The main reason for the rest of the increase, said the report, was investment in IT and an "online travel agent proposition".
The steady rise in the debt position over the past three years is startling: net debt was £292m in September 2008, £675m in September 2009 and £804m in September 2010. Moral of the tale: tour operators should be financed conservatively. Given the number of high-profile failures over the years in this industry, you might assume the lesson had been learned. Not at Thomas Cook.'
Extract taken from today's Guardian:
Thomas Cook: from net cash to debt crisis in four years! Thomas Cook under Manny Fontenla-Novoa shot itself in the foot with an appallingly timed share buy-back and acquisitions
'Here's a startling fact about Thomas Cook: in September 2007, the company had cash of £394m. Today it finds itself begging its banks for an extra £100m to add to a debt that was about £900m in September this year and could reach £1.5bn by the end of December as seasonal outflows hit. What happened?
The rise and rise of budget airlines and the growth of Expedia and other online travel agents didn't help, as is well known. Less appreciated is the extent to which Thomas Cook, under chief executive Manny Fontenla-Novoa, shot itself in the foot via an appallingly timed share buy-back and an acquisition spree.
The annual report for 2008 records the buy-back: 120m shares bought at an average price of 241p each between March and October of that year at a cost of £290m. For the same sum today, you could buy all Thomas Cook's shares three times over.
On the acquisition front, Fontenla-Novoa was busy looking for "opportunities that can accelerate our journey by capturing growth and value through mergers and acquisitions," as the 2010 annual report put it. A flurry of deals in 2008 brought in Jet Tours (£56m), Canada's TriWest Travel (£57m), Hotels4U (£22m) and Gold Medal (in two batches: £25m plus £47m). Öger, a German operator, arrived for €30m (£25.9m) in 2010.
All the while, Thomas Cook was spending heavily internally. Last year's annual report showed a jump from £79m to £266m in net expenditure on fixed assets and intangibles. Some £66m alone was to buy two aircraft which had previously been leased. The main reason for the rest of the increase, said the report, was investment in IT and an "online travel agent proposition".
The steady rise in the debt position over the past three years is startling: net debt was £292m in September 2008, £675m in September 2009 and £804m in September 2010. Moral of the tale: tour operators should be financed conservatively. Given the number of high-profile failures over the years in this industry, you might assume the lesson had been learned. Not at Thomas Cook.'
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BBC Radio 5 Live
On BBC Radio 5 Live, the discussion from an analyst (not to be believed obviously), is that the equity value of TCG is near zero.
His interpretation is that current share price of around 10p is overvalued.
I agree that this becomes an issue of perception. If punters stop booking with TCG because they consider it too risky (even with ABTA/ATOL bonding), the situation will be even worse in a matter of days.
The best thing for TCG is that hopefully when the market opens on Wednesday, some other company or other will have a bigger problem, and hence hog the headlines.
I wouldn't buy the shares at any price until after the results are issued.
His interpretation is that current share price of around 10p is overvalued.
I agree that this becomes an issue of perception. If punters stop booking with TCG because they consider it too risky (even with ABTA/ATOL bonding), the situation will be even worse in a matter of days.
The best thing for TCG is that hopefully when the market opens on Wednesday, some other company or other will have a bigger problem, and hence hog the headlines.
I wouldn't buy the shares at any price until after the results are issued.