Investors cheer Thomas Cook’s finance scheme

Marion Dakers
HOLIDAY company Thomas Cook’s shares rocketed yesterday as it unveiled a £1.6bn capital restructuring that clears the path to resuming dividend payments within the next two years.

The firm said it will raise £425m from a share placing and rights issue, plus a further €524m from a bond issue and £691m in new loan facilities.

The refinancing comes a year after Harriet Green joined the firm as chief executive and represents a major step in the group’s three-year turnaround plan.

“This refinancing will reduce the very significant debt that we inherited, lengthen its repayment profile and help us deliver the full benefits of our strategic plan,” Green told reporters.

“At the end of the 2015 financial year we’ll be in a position to start thinking about resuming the dividend.”

The company reported £47m of cost cutting measures for the six months to the end of March and said it now aims to save £170m this financial year, up from its previous goal of £145m.

Green has moved to close 200 high street shops and cut 2,500 jobs and offloaded non-core parts of the business. The firm aims to boost the sales it makes online.

Revenues in the period were 2.6 per cent lower at £3.2bn, while pre-tax losses narrowed to £390.9m.

Bookings for the summer season are “slightly ahead of last year despite planned capacity reductions of seven per cent”, the firm added.

Ratings agency S&P yesterday placed the firm on review for an upgrade following the financing scheme. S&P currently has a B- rating on the firm.

“Overall, although the size of the £425m equity is above our expectations we believe that the dilution will be softened by improved interest metrics and higher profit improvement targets,” said Shore Capital analyst Greg Johnson.

Shares closed up 13.4 per cent.



Thomas Cook is working with financiers at Gleacher Shacklock, Credit Suisse, Short Partners and new joint broker Jefferies Hoare Govett on its £1.6bn capital restructuring.

Gleacher Shacklock, led by chief executive Tim Shacklock and assisted by Peter Warner and Sandor de Jasay, has spent months working on the details of the package.

Shacklock and Credit Suisse are joint sponsors on the plan, and together with Short Partners are acting as joint financial advisers.

Short Partners, a boutique corporate advisory firm, is led on this deal by partner John Short, the former head of restructuring at Deutsche Bank.

Credit Suisse has fielded a team led by EMEA investment banking vice chairman Sebastian Grigg. Simon Taurins, Robert Mayhew and Anthony Leung are also on the ticket.

Jefferies was yesterday appointed joint broker alongside CS, fending off competitors including Morgan Stanley for the role. Neil Collingridge, Simon Hampton and Lee Morton are named as the lead brokers.

Linklaters is providing legal advice to the banks regarding the share placing and rights issue. Slaughter & May is counseling the company, Shearman & Sterling is advising on the bonds, and Allen & Overy is providing legal advice on the bank debt element.