Shares of British tour operator Thomas Cook, the owner of Thomas Cook (India) Ltd, crashed by nearly 70 per cent on Tuesday after announcing that it had started talks with its banks to renegotiate the terms of its debt facility.
It was just over a month ago that the company said it had successfully renegotiated the terms of its debts and secured a new £100 million bank facility to tide it over the winter period, traditionally a cash low-point for the industry.
Following a meeting on Monday, the company had determined that it would be ‘prudent' to enter discussions with its 17 lenders, interim CEO, Mr Sam Weihagen, said on a conference call.
The company wants to secure additional short-term funding in the region of £100 million.
He added that he was confident the banks would agree to renegotiate the terms. As of the end of September, Thomas Cook's debt burden stood at £900 million , he said.
The Euro zone crisis, the political upheaval in the Middle East and North Africa, and the flooding in Thailand had hurt trading. The hardest hit markets were Belgium and France, where trading is down 20 per cent vis-à-vis a year ago.
‘Biz as usual'
The company stressed that negotiations would have no impact on customers and that it was ‘business as usual.' “We are taking bookings as we are doing every other day,” said Mr Weihagen, who stepped in as CEO following the resignation of Mr Manny Fontenla Novoa in August.
The company has issued three profit warnings this year.
The company has also now postponed the publication of its results, due on Thursday.
Thomas Cook first began operating in India in 1881. TCIL, bought from the Dubai Investment Group in 2008, has branches in 78 Indian cities. In the domestic arm, foreign promoters — TCIM and Thomas Cook UK Ltd — were holding 77.13 per cent stake as on end-September. About 47,000 small investors hold 15.61 per cent stake in the company.
TCIL fell 9.6 per cent to Rs 39.90 on the BSE, and 10.4 per cent to Rs 39.50 on the NSE. In London, Thomas Cook shares were down 68 per cent in early afternoon trading. Interestingly, this slump has brought the market value of the UK parent quite close to that of the smaller Indian operation.
Indian operations
Net profit of Thomas Cook India rose 114.1 per cent to Rs 24.52 crore in the quarter ended September 2011 as against Rs 11.45 crore during the previous quarter ended September 2010.
Sales rose 20.15 per cent to Rs 89.50 crore in the quarter ended September 2011 as against Rs 74.49 crore during the previous corresponding quarter.
In the first nine months of 2011, Thomas Cook India reported an 18 per cent growth in sales and a 30 per cent jump in profits.