LONDON, Nov 23 – Thomas Cook’s banks have appointed Ernst & Young to advise them in a sign the tour operator’s lenders are gearing up for a possible restructuring of the company, sources familiar with the situation said.
The world’s oldest travel firm yesterday asked lenders to come to its rescue for the second time in five weeks, sending its shares into freefall.
A trader in Thomas Cook’s debt said the decision by Thomas Cook’s 17-strong banking syndicate to appoint a debt advisor suggested they anticipate an in-depth restructuring of the firm will be necessary rather than just a refinancing of its loans.
“I suspect they (E&Y) are in there to do an independent review and come up with solutions. It will take time to identify the options,” the trader said.
“We believe that the sum of the parts may be greater than the whole, in which case, the company might decide to spin bits off, but it’s a tough market and any competitor willing to take that over is not going to pay a premium,” he added.
Thomas Cook and Ernst & Young declined to comment.
British Prime Minister David Cameron said he had asked the business ministry for a report on the situation at travel operator Thomas Cook.
“I have obviously asked the Business Department to give me a report on what is happening in terms of Thomas Cook, because I think it is important to make sure that this business is in a healthy state,” Cameron said in response to a question in parliament.
Loan market traders marked down Thomas Cook’s term loans and revolving credit facility to 57.5 per cent of face value in secondary markets today from 62.5 per cent yesterday. The loans are relatively illiquid and not actively trading, traders said.
Shares in Thomas Cook were up 21.7 per cent to 12.4 pence at 1330 GMT, regaining only a fraction of their losses this week. – Reuters