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Thomas Cook hits back at claims it misled shareholders over cash position

Published: 09:12 15 Jul 2019 BST

travel
Thomas Cook is in talks with China's Fosun about a rescue deal

Thomas Cook Group PLC (LON:TCG) has been accused of misleading small shareholders about its cash position before announcing it was in rescue talks with Chinese backer Fosun.

The travel firm announced on Friday that it was considering a deal that would see existing shareholder Fosun take a majority stake in the tour operator business and minority stake in its airline unit in return for a £750mln cash injection..

READ: Thomas Cook set for £750mln bail-out from Chinese backer Fosun

Sharesoc, which represents individual investors, has asked Thomas Cook to explain why the company claimed its cash position was improving just weeks before revealing the talks with Fosun, the Daily Mail reported on Sunday.

Cliff Weight, director of Sharesoc, said statements made in February and May appeared “unduly optimistic”.

“Thomas Cook's directors need to be held to account for making such positive statements, which may have misled many investors,” he said.

Shareholders see investment in Thomas Cook slump

In May, Thomas Cook boss Peter Fankhauser said the group had taken a “number of prudent early steps to de-risk our business”.

Individual shareholders, which together own 20% of Thomas Cook, have seen their holdings in the company slump 79% to 5.18p over the past three months due to concerns about disappointing trading and a debt pile of more than £1.2bn.

“We have also taken the proactive step to approach our financing partners and are engaged in constructive discussions to ensure we have the flexibility and resources to continue investing,” he said.

In February, the company announced plans to offload its airline business following a strategic review of the business.

However, in Friday’s announcement the firm said the airline disposal had been put on hold because trading conditions had deteriorated and it would be unable to fetch a price that would make a difference.

Thomas Cook hits back at claims

A spokesman for Thomas Cook told the Mail: “The statement that was made on May 3 was in response to media speculation in relation to the company's financing requirements, and clearly stated that a further and more detailed update would be provided on May 16.

“Our audited half-year results statement on May 16 highlighted a number of risks and uncertainties in relation to the challenging trading environment, including competitive pressure and higher fuel and hotel costs.

"We were also clear in relation to the risks and uncertainties associated with the outcome of the airline review.”

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