Thomas Cook share price slumps amid refinancing plan

Thomas Cook’s (LON:TCG) share price has posted another hefty fall in London as the troubled operator announced changes to its proposed recapitalisation plans. The updated rescue plan could see its existing shareholders get significantly diluted.

As of 10:10 BST, Thomas Cook’s share price had given up 14.58 percent to 8.23p. The group’s shares have given up more than 90 percent of their value over the past year.

Refinancing plan update

Thomas Cook announced in a statement this morning that it was in advanced discussions with its biggest shareholder Fosun Tourism Group and its core lending banks, which include the injection of additional capital on top of the previously announced £750-million cash injection. The additional capital will be about £150 million and is set “to provide further liquidity headroom through the coming  2019/20 winter cash low period and ensure the business can continue to invest in its strategy”.

Thomas Cook noted that the proposed recapitalisation will require a reorganisation of the ownership of the Tour Operator and Airline businesses, resulting in a significant amount of debt converted into equity, meaning that existing shareholders are “expected to be significantly diluted as part of the recapitalisation”.

Bloomberg reported last week that the London-listed group’s investor Neset Kockar was demanding a role in rescuing the troubled group after the Turkish tourism entrepreneur’s purchase of a stake last week. He further told the newswire that Thomas Cook could be a success with the right strategy and management approach.

Analysts on tour operator

The nine analysts offering 12-month targets for the Thomas Cook share price for the Financial Times have a median target of 13.00p, with a high estimate of 18.00p and a low estimate of 3.00. As of August 10, the consensus forecast amongst 10 polled investment analysts covering the London-listed tour operator advises investors to hold their position in the company.