Thomas Cook under pressure as payments intermediary seeks to hold onto cash
By Alexander Bueso
Date: Monday 20 May 2019
(Sharecast News) - Shares of Thomas Cook are coming under continued selling pressure at the start of the week, at least in part after Sky News reported that a payments intermediary in Scandinavia was negotiating holding onto holidaymakers' cash for several weeks instead of two days.
A source close to the situation also told the broadcaster that "some card acquirers" had discussed the possibility of retaining as much as half the funds paid by Thomas Cook customers, although "insiders" had explained that only in the Nordic region did payments firms have the right to extend the retention period past two days.
The news from Sky followed the poor full-year outlook provided by the company during the previous week, which led analysts to slash their estimates for the travel group's earnings, and according to some observers might itself see some potential clients delay their bookings.
Investors were also especially cautious after the company's auditors said during the previous week that there were "material uncertainties" around Thomas Cook's efforts to sell its airline unit in order to raise cash, with some analysts now anticipating either a debt-for-equity swap, a substantial rights issue or both.
The company had agreed a term sheet for a £300m bank facility which would become available on 1 October, but depending "on progress in executing the strategic review of the Group Airline."
As of 0937 BST, the company's 2020 debt was trading 14 cents lower on the euro to 33.36 cents, according to Bloomberg data, and its shares were down by 23.73% at 9.0p.
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