Thomas Cook soars after banks give more funds
THOMAS Cook Group rose 21pc in London trading after banks agreed to provide a loan that will give Europe's second-largest tour operator time to reorganise its business.
The shares closed up 3.71p at 21.73p and have now recouped almost half of the 75pc drop last Tuesday, when the company said it was in talks with banks and delayed its annual results. Evolution Securities raised its recommendation to 'neutral' from 'sell'.
Thomas Cook said late on Friday that its lenders agreed to provide a £200m loan, which will be available until April 30, 2013. That eased concern about the company's financial position after political unrest in North Africa and a squeeze on consumer spending in the UK hurt holiday bookings ahead of the seasonal low period of cash.
"Although the new facilities provide some short-term relief, we do not believe that it is necessarily a long-term confidence vote in the group," Greg Johnson, an analyst at Shore Capital, said. "Longer term, we still expect the business to shrink materially, assets disposed and potential fresh capital raised, which are likely to lead to significant deterioration in earnings."
The new agreement with lenders replaced a £100m line announced last month. "Fortunately, all the bad press has come at a relative low point in the booking cycle and the group has the funds and time to restore partner and consumer confidence in its brand and survival," Evolution analyst James Hollins said. (Bloomberg)