Markets.com reckons that Thomas Cook Group’s (LON:TCG) latest update signals that the London-listed company’s cash crunch is worse than feared, Citywire has reported. The comments come after the troubled tour operator updated investors on its refinancing plans yesterday, saying that it was in advanced discussions with its biggest shareholder Fosun Tourism Group and its core lending banks over an additional cash injection of about £150 million.
Thomas Cook’s share price tumbled on the news yesterday, giving up more than 18 percent to close at 7.87p, with the move set to result in dilution to existing shareholders. The tour operator’s shares have extended the previous session’s losses this morning, having given up 1.63 percent to 7.74p as of 08:07 BST, and are down by more than 91 percent over the past year.
Cash crunch worse than feared
Citywire quoted Markets.com’s analyst Neil Wilson as commenting yesterday that the “cash crunch facing Thomas Cook ahead of the winter season is worse than feared and points to the precarious position of the balance sheet”. While investors were hoping that the tour operator could “flog its airline and somehow salvage some value,” the broker reckons that this is going to be ‘difficult if not impossible’ to get the amount it wants.
“The only outstanding question seems to be whether Fosun runs foul of Chinese regulators who are concerned about companies overleveraging to fund acquisitions,” he pointed out.
Other analysts on tour operator
The nine analysts offering 12 month price targets for the London-listed group for the Financial Times have a median target of 13.00p on the shares, with a high estimate of 18.00p and a low estimate of 3.00p. According to MarketBeat, the tour operator currently has a consensus ‘hold’ rating, while the average target on the Thomas Cook share price stands at 37.70p.