Thomas Cook interim chief Sam Weihagen has given reassurance that the firm has a strong future amid concerns about its latest financial worries.
The travel giant today announced the unusual step of suspending its final year results as it seeks to secure more liquidity from its lenders – 17 banks including the four largest in the UK.
Speaking this morning on an update call for the press, interim group chief executive Weihagen was asked by the BBC to respond to concerns being expressed about the company.
He said: “We are open for business. We are a robust business that has a great future. It’s business as usual, we are trading within all our financial covenants, we have all the protection in place like any other travel company.”
Cook said the outcome of its talks with the banks could impact on its year-end results so it was decided it was the right thing to do to suspend them.
However, this morning’s news of the suspension of its year-end results has seen the Cook share price plummet over 70% to around 12p, an all time low.
Paul Hollingworth, chief financial officers, said the group was seeking another £100 million from its lenders to get it through a deteriorating market position over the winter.
This is a similar sum to which Cook secured in October when it entered similar negotiations with its banks, a move that cost it £5 million and “50 to 70 basis points in terms of higher interest”.
Hollingworth said he was confident of a speedier conclusion to the current round of talks with banks to the four to six weeks the last round took. He said: “We are seeking some additional liquidity over this low point. As of today I don’t think we’re looking for an amount dissimilar to what we sought in October.
“We are trying to make sure the group is in as prudent as possible should this decline in trading continue.”
Cook said the downturn in trading came to light in a meeting yesterday at which it was reported France and Belgium were around 20% down and its new Russia business was trading poorly.
The former was blamed on the growing crisis in the Eurozone as well as the continuing concerns about the situation in north African destinations, particularly Tunisia.
The Russian business has been severely hit by the flooding in Thailand and the troubles in Egypt, two of the country’s largest outbound markets.
Hollingworth said Cook’s banks were “fully cogniscent of some of the challenges around a very large travel group” and they were seeing similar problems with other big clients in Europe. “Why wouldn’t they be supportive you have to believe it’s in their interests to come to a quick speedy conclusion,” he said.
Although Cook needs to secure its short-term position, Hollingworth said it remained focused on restructuring its UK business and getting its net debt, currently at £900 million, down.
Asked why Cook hadn’t considered a share rights issues to deal with its debt Hollingworth said all options were open but that investors would probably want to know first who will be appointed as the new permanent chief executive.
“From an investors point of view that maybe a question they would like answered first. It’s never impossible but logistically impossible at this point in time,” he said.
Asked about Cook’s share price he added: “The extremely low share price is a concern but at the moment our concern is we trade with a more robust financial position so we can attend to the share price.”