Anyone who thinks there's anything strange about it: the initial bids were all non-binding bids. That includes the bid for the Nordics (which I guess would have been for Nordics tour ops and airline). Those will have been ok so TCG said they had multiple bids and it looked good. Then you sit at the table with them and they all start crying how the market is bad and how it is getting worse and how they can only make lowered binding bids. At the end of the day you add it all up and the result is below what you needed so you drop it and look for a different solution.
Chances of that being called fraud or corruption: 0
If the bond holders would have as much power as you think they have why do you think their bonds are trading at 26% (2022) and 29% (2023)? A debt for equity swap is already offered to them and would be preferential over it going into administration so they will take it after negotiating the best outcome for them (which will be a bad outcome for shareholders). As to shareholders, they can either pick between something or nothing. Maybe some will say "I don't care I rather have nothing" but enough of them will accept that something is better than nothing. Not in the least cause some of them can now try to buy in at levels that are close that what it should be worth afterwards. Which means they aren't exactly sitting on big losses. The Citi analysts made a rough guess of 3p, who's to say it isn't 4p or even 5p? It's a gamble and too early to tell.
PF's office is indeed in London. I can't imagine he's not welcome there, I'll have a listen but I would say anyone working there is smart enough to know what investing is about. As has been pointed out I doubt his personal interests are going to be served massively by this either, he would've been better of with this going to 1£ giving he's sitting on 4M in shares. If you honestly believe people's personal preference is massively at play you should just blame Sten Daugaard. At least that sounds somewhat plausible given he only recently moved into the CFO position so if this would be really a story of international intrigue then he'd be the mole. It was supposedly also him who made the call on writing off the goodwill which in itself is an entirely non consequential operation but ever since everyone is yapping about the massive "loss" they are making this year. So hey, maybe he did it on purpose?
Obviously in reality it's just all sour grapes from people who have lost money. I can understand that. I lost money too and also thought this could've been resolved differently but once you make the decision to not care about the shareholders you're past the point where there's going to be better solutions that do care about them. You'd be just giving up money to give to them. Also given it's a PLC they have all kind of interesting options to shaft shareholders so that's also on to us as PIs for falling into the trap of risking it.
As it is a UK PLC you have 2 options left now:
- It happens with a massive dilution
- it happens with 0 value left for several stakeholders
We're at the stage where it is this or they force the deal through. Lenders and Fosun have made a deal and they are really the ones in control now.
Given the parameters of the deal (which are indeed still quite shrouded) it seems that Fosun and the lenders are on the same page. Hence Fosun doesn't care about its existing 18% stake. It'll be good for TCG as an entity (no immediate massive job losses, customers are safe, new investments ...), Fosun (they'll walk out of this owning the Tour Ops entirely and a chunk of the airline) and the lenders (they can do D4E, own a majority stake in the airline and sell tour ops).
The scenario may end up being similar to one I put out before when I said that the entire "Airline can't be owned by Fosun" part can be fixed by just selling Tour Ops instead. With the difference that now it won't be the existing shareholders that will own the airline afterwards but the lenders.
While I had personally envisioned different solutions would materialise I see no way this can end well for shareholders now. Now the cat is out of the bag this deal or another similar deal favouring the lenders is what will happen.
For now it sounds rather complicated without seeing any of the detail. A D4E would wipe out Fosun and give control to the lenders. Fosun would then be quite far away from holding a majority stake and would need to buy the tour operator. Maybe just split it first and then D4E the airline. In that way the shareholder issue for the airline is solved and Fosun still has its stake in TC Tour Ops. The effect for shareholders would then be that you keep your stock in tour ops but hold hardly anything in the airline.
Quisty, as you think Jet2 and Thomas Cook are the same:
- Thomas Cook massively outperformed Jet2 outside the UK! Millions and millions of customers compared to 0 for Jet2. Jet2 must be crap?
- Jet2's hotels? Same story! Thomas Cook's hotels massively outperformed it and got more customers.
Cherry picking numbers is about the easiest thing in the world, especially if the companies aren't exactly comparable due to different strategies, markets ...
Note that this does imply that my personal opinion is that jet2's performance is not something to rate Thomas Cook on cause honestly it doesn't work that way. Thomas Cook needs to perform in ALL of its markets and whether the UK alone goes up or down is of little consequence really.
Hopeso, probably not best to try and see it as a link to Operating Profit. In most cases you'd want to look at the actual mechanism used especially when someone makes a big leap.
For example that big drop in Net Debt in FY13 is essentially in this 1 line from the annual report:
Rights Issue and Placement of 496.6 million Ordinary Shares raising gross proceeds of £431 million
As jj-- correctly pointed out before the net debt as reported is a bit of a weird story anyway. It's not net debt by the strict definition of it as some things are left out. Essentially changing net debt can be done in various ways of which some will be rather questionable (e.g. tell your suppliers somewhere in the year that your payment terms change from 30 days to 60 days and at the end of the year you will have paid only 11 months and hence have more cash and the net debt would decrease in the report (due to what they leave out of the calculation). Looks good, works once.
For net debt to improve you either get more money so you can pay off the debts or you just pay them off. Making a profit is obviously one of the ways to get more money but it's not a reduction of net debt if it is just Operating Profit (which amongst things means that you haven't paid the interest on the debt yet).
Quisty, the funny thing is that rather than look something up you just spout nonsense thinking that you're clever. HG left after FY 2014. So the result for that year? A loss. FY13 then? Loss. Hey maybe she did something spectacular in those few weeks of FY12 she was in TC? Oh, no, loss too. Net debt improved during her tenure, that's it. Essentially you are only demonstrating you have never looked at any of the results.
Quisty, the last time they made a profit was FY 2017. HG was long gone by then. FY 2016? Profit. FY 2015? Profit. Since when is 1 "many"? There was indeed a massive slide in the last year but your (and many others) entire story about how HG was the last and only light in ages is entirely based on nonsense.
Airline with some tourops vs tourops with an airline
Private company vs public company
High risk move into scheduled commercial flights vs sticking to charters
On a company level? No, not really. The general economic circumstances (given Brexit) are somewhat similar yes. But comparing Tour Ops in 2019 with an Airline in the early 90s is fairly pointless. To be honest you can't compare most services to those in the early 90s as a lot has changed in the last 25 years.
"This business has not made a profit in years." -> last time was fiscal year that ended September 2017 which is less than 2 years ago.
As to evolution. Thomas Cook has done a lot more after HG left than during and has solid plans to continue. Yet everyone still thinks that she was magical. (HG is a good example that actually yes, if enough people believe in something SP can raise without too much of a reason to do so).
Within the industry the "so-so" airline has won "World's Leading Charter Airline" 4 times in a row 2015-2018. A massive impact there is Condor and Nordics performance but a lot of people here seem blissfully unaware of the performance of TC outside UK.
So essentially I guess you are one of those who repeat the same story over and over again in the hopes the SP becomes what they want? Cause it's not that it is supported by any facts.
Fosun is the biggest shareholder and they can't own a European airline. That by itself is an indication they are interested in the tour operator. The main reason they had to step up a bit is that TC is getting unsolicited offers for tour operator parts and Fosun has to make sure they aren't losing out. But essentially the whole airline sale is TC offering Fosun the option to get their hands on the tour operator.
So for Fosun it remains crucial airlines get sold in order to get the Tour Operator. Unless of course TC flips it around and sells the Tour Operator to Fosun and keeps the airline. It would be a strange and unexpected "solution" but I don't see any real reason why that can't be done.
Anyone thinking Brexit is involved: after Brexit it is still mainly a European airline so the rules would not change at all and Fosun can not have an interest in owning it so it must be sold for their offer to be possible.
jj, what makes you believe they are supposed to go back into the pool as the result of the Air Berlin break up? When Air Berlin was broken up EasyJet bought a part including slots and so did Lufthansa. The discussion was mainly related to anti-competitive behaviour. Lufthansa offered to give up some of the slots as part of their bid in order to avoid further EU investigation into their dominant position. At no point during the Air Berlin break up did anyone suggest slots were to go into the pool as a rule.
To quote from M.8633 (EC case on Lufthansa merger with LGW, the Air Berlin sub they bought):
(37) Under the Slot Regulation, the general principle regarding slot allocation is that an air carrier having operated its particular slots for at least 80 % during the summer or winter scheduling period is entitled to the same slots in the equivalent scheduling period of the following year (the "grandfather rights"). Consequently, slots which are not sufficiently used by air carriers are reallocated (the "use it or lose it" rule).
Note that Air Berlin ceased their flights and hence at some point you can start to question the results of the grandfather rule as the 80% usage may not be there for all recent seasons. But that's a debate that has no relevance for Thomas Cook as they will not cease their usage.
So rules are not a blocker but potentially Lufthansa will do a gesture again. Though as noted in the EC case giving up slots isn't necessarily solving a lot cause Lufthansa would be among the first to receive slots from the pool anyway. Also as all airlines point out that further consolidation will happen there's little option except for being more lenient when it comes to certain dominant positions as it will become more common rather than less common.
So not really sure which articles you read but they were misleading and no idea who you talked to in airline management but their knowledge on slot rules seemed to be fairly limited.
jj, why would it be questionable they can be grandfathered? While debate on the topic has been ongoing continuously for over a decade there's to my knowledge nothing special in Germany at the moment that would affect it.
jj, how has it declined substantially? Buying an airline like Thomas Cook's would benefit them greatly due to the type of business it would get them if they agree on a deal for the future. Lufthansa comes nowhere near the Seat Load Factor TCA has. More filled planes and less seats that need to be sold of at bargain prices as packaged seats are not part of the same market.
If for whatever reason Fosun would be in a hurry (which I doubt they would be for now) they can sell them Tour Ops and keep the Airline in TCG. You would then own shares only in TC Airlines. Chances that they sell the airlines to Fosun is pretty much 0. The EU would not like it. Best thing to do is to get rid of airlines before Brexit anyway.
The thing is that Triton was described as "a highly preliminary and unsolicited indicative offer" and Fosun as "Thomas Cook confirms that it is in discussions with Fosun following receipt of a preliminary approach."
The first was not something they expected while the latter they did. As to whether Fosun will buy it all I guess they will know TC well enough to essentially block the full sale of the Nordics business. As a full sale would include a few things they should try and get their hands on (Airshoppen and the Nordics managed hotel brands). If Triton is ok with buying a slightly stripped Nordics business Fosun might well not care and be willing to give up the Ving brand name (they would still be able to have a Nordics business and keep the other non-local brand names). Then again as you would expect Fosun to be looking at merging their interests (TC and Club Med) it all depends on what kind of market they see in Nordics. If they think they can use the fact that TC is market leader there to expand their Club Med sales then they might not be willing to give up anything in Nordics.
Essentially, splitting Tour Ops would generally be a mess. TC quite likely is better off selling all of it to Fosun and just use the Triton offer to avoid it has to sell too cheap.