Thomas Cook shares down 75% after it admits it needs more cash
23.11.11
Thomas Cook shares dropped by 75% yesterday after the travel company announced that it is in talks with banks to increase its lending facilities in order to ensure it has enough cash to see it through to the end of the year. It is delaying the release of its full year results while discussions with its bankers take place.
The company said in a statement that there had been a deterioration of trading since October and it needed to ensure it had enough funds to see it through the quieter winter months. It still expects to report a headline operating profit for the year ended September 30 of £320m, in line with previous guidance, and it is currently not in breach of the terms of any of its loans. It said it wanted to ‘improve its resilience if trading conditions remain difficult’.
Last month Thomas Cook arranged a new £100m credit agreement with bankers to help with cashflow, but yesterday chief financial officer Paul Hollingworth said it was seeking a further £100m from lenders as a ‘prudent’ measure . If agreed, the loan would push Thomas Cook's net debt to close to £1bn.
While trading in the UK has been tough, interim chief executive Sam Weihagen said the most difficult markets were France and Belgium, which are both down 20% year on year. He also revealed that the company's recent Russia acquisition had a slower than expected start to the new financial year.
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