Thomas C(r)ook.

It’s all going wrong at Thomas Cook. The shares are currently at an all time low having dropped to 10p today.

The deceased Thomas Cook.

So just what’s going on at the UK’s favourite travel Agent? More to the point where’s the money gone? Well I can exclusively reveal that heads are set to roll the chopping block has been brought out and investors can expect to see several heads guillotined (French style). I spoke to some of our more prudent sources on just what Thomas Cook are talking to their banks about? Yes you’ve guessed it there’s almost certainly some form of equity about to be raised with further dilution for holders looking likely. “The existing credit facilities comprise a £150m amortising term loan and a £850m revolving credit facility which mature in May 2014. The terms have been amended to provide additional headroom for the Group.”  So say the company but that was back in October this year! There could also be further asset sales as the company look to bring in much-needed cash. The problem they’ve got at the moment is that Banks are, in the current melt-down, risk averse, so any future funding or refinancing may well depend on being secured against paper. Rates from our friends the bankers will be penal! Bankers can always be depended upon to kick a dog when it’s down!

The Board of (Miss Direction) Directors should be put up against a wall and shot after all on the 29 september 2011 they were telling everyone that the Business had performed well? With the usual guff that gets reiterated for the great unwashed  “results are expected to be in-line with market expectations. The Group delivered steady results for July and August,Variety of measures underway to strengthen the balance sheet; Cashflow performance is strong”

Then some 58 days later we get this! Thomas Cook announces that as a result of deterioration of trading in some areas of the business in the current quarter, and of its cash and liquidity position since its year-end, the Company is in discussions with its principal lending banks with regard to its facilities during the seasonal low period of cash in the business. While the Company currently remains in compliance with its financing covenants, it also intends to seek agreement from its lending banks to adjustments that will improve its resilience if trading conditions remain difficult. As a result, the Company will delay its announcement of its full year results until these discussions are concluded.  The Company expects to report a headline operating profit for the year ended 30 September 2011 broadly in line with previous guidance.

So what does the above tell you? I’ll say it out loud and clear. The Thomas Cook business model operates 50 days away from Bankruptcy at any given time. The Board are a bunch of charlatans! What the above should tell you is that when this lot were spouting bullshit they knew that the company were 30/40 days away from major financial difficulties! Not the kind of Board I’d be investing in.  Rumour is that Downing street are keeping a close eye on the situation after all the last thing the government want are tens of thousands of UK travelers stranded abroad while many more having booked their summer hol’s find that they have to go through the ATOL rigmarole of compensation!

Viva!

Dan.

PS.  Stay well away from this company and do not attempt to day-trade it! You have been warned!