The already intense pressure on Thomas Cook increased again on Tuesday when the shares plunged another 15% leaving shareholders nursing huge losses.
The 177-year-old veteran of the travel sector has embarked on a charm offensive in the City, meeting investors to reassure them that the future is solid and that it will not breach banking covenants. Chief executive Peter Fankhauser has met several top-10 shareholders in the past few days after a third profit warning in just a few months last week.
Shares crashed 25% then and have kept on falling. On Tuesday they were down another 4p at 19.5p, which leaves the company equity valued at just £307 million. Shares were 140p as recently as May.
Company insiders say shareholders are supportive, albeit angered at the attack on the shares.
Short-sellers are targeting the stock amid increasing concern that it may need to seek fresh capital. Berenberg has described Thomas Cook as “uninvestable” until it gets at least £400 million in fresh equity.
Marshall Wace and TT International are among the funds betting Thomas Cook shares will fall. About 2.5% of its shares are out on loan — part of the shorting process.
In the profit warning last week, Thomas Cook was at pains to say banking covenants would not be breeched. The loan deals are not influenced by the share price, it is understood.
In a September profit warning, Thomas Cook said the unusually hot summer was to blame as Brits either delayed booking holidays or just stayed at home.
On that occasion, profit forecasts for the year fell from £323 million to £280 million. Last week that profit figure was again revised down to £250 million after what Fankhauser said had been a “disappointing” year.
With debts also rising sharply, Thomas Cook had to suspend the dividend payment, another blow to already suffering investors.
