Thomas Cook India falls & recovers

On Sunday night, Thomas Cook, the 178-year-old British tour operator collapsed. The company was hurt by its high debt. It needed 200 million pounds + another 900 package it had agreed. On Sunday, when the Board of Thomas Cook met the lenders and creditors to work out a rescue plan, all talks failed and the company failed to keep afloat.

Chinese group Fosun International, run by Guo Guangchang, a billionaire regarded as China’s Warren Buffett, bought its first stake in Thomas Cook in 2015, already taken over France’s Club Med and Canada’s Cirque de Soleil.

In August this year, Fosun agreed that it will bring in £450m cash in return for a majority stake in the group, which also required the banks to write off £1.7bn in debt. It was that deal that fell apart at the weekend. 

Thomas Cook (India) is listed on our bourses and this worry led to the stock losing 9.3% at Rs.142 but soon clarification sunk in – the CEO of the company said, “Thomas Cook India reiterates that it is a completely separate entity from Thomas Cook UK post acquisition in 2012 by Canada based Fairfax Financial Holdings.”

Thomas Cook (India) was acquired by Fairfax Financial Holdings via a 77% stake in 2012.  Thomas Cook UK has had no stake in Thomas Cook (India) since then.

The company said that it has a strong financial position with cash and bank deposits balances at Rs.1389 crore as of June 30, 2019 . On a standalone basis Thomas Cook India is debt free upon pre-payment of Rs. 67 crore debenture obligations ahead of schedule.

The stock price recovered since then but remains in the red at Rs.152 levels, down some 2.5%.