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Amers,
I understand your frustration from another investment of mine, as I wait for kier management to release numbers.
But..... Let's step into management shoes at TCG.
Positive view - close to agreement with creditors and they have outline of a deal. Not finalized though so still in negotiations.
Negative - only starting negotiations and no agreement in place between new money and debt write off. This will lead to more press speculation that they won't be able to make agreement and company will fail, causing more panic with end customers causing more value destruction.
So, no announcement means no deal agreed.
Directors are in discussions with banks and bondholders and potential new money providers (Fosun) trying to save the Company. Doing their fiduciary duty. Don't expect an update from the Company until they are close to finalising a plan. (at which point, current equity holders get very little)
Alexios, No. In fact TCG don't report quarterly. They give a quarterly update, but no accounts at all.
Manchego, At no point have I "laughed at others". I am sitting on big losses in Tullow and Kier, so I know I need to learn more. If people shared some analysis it might make some other private investors to write a one page document on their investments. I do it now - it is a good discipline. Doesn't make me not make mistakes, but helps me figure out where I went wrong.
Couple of questions raised:
Listing rules in relation to accounts - legally only need to file annual accounts. The bonds require semi-annual but have 180 day period after end of period. So legally next set of results for end of September not due until mid march next year
In relation to statements saying bids. It didn't say firm bids and they said Oncall they were indicotive. Since may statement there was a Lufthansa profit warning which would be material.
In relation to saying bids have gone away, probably not even true at the moment. So can't say that.
However, the company would have had to use the proceeds to pay down debt, condition of the bonds, so if they paid down down debt but was still too much that the remaining business was insolvent they couldn't do it.
Stating the bids were too low would have caused market panic and caused bookings to drop. So company right not to say this. They had to get outline of agreement in place for survival of company.
If not they are trading insolvently.
People need to take some responsibility for their decisions instead of looking for someone to blame.
Reading any press on European air travel industry pointed to difficulty in the market. Norwegian, Lufthansa Flybe. Why then did anyone think TCG were going to be able to sell it at a good price.
Because the Net Asset Value of the property is worth £3.34 so people might be thinking this bid would cause a bidding war.
Not sure - there are some competition issues with Stonegate buying, hence saying they are going to sell 100 pubs after the deal goes through.
Goes to pre-pack administration - new entity called Thomas Cook Group 2 plc is set up and process continues without existing shareholders.
The Management will easily argue the Company is insolvent if Debt for equity is not completed.
look at the Companies House documents and the movement of assets etc. Already likely to be worked on.
No way am I bullish, but SDIs will be significantly lower this year, less airport disruption.
So adjusted ebit after SDIs might not be as bad as some are saying.
However, I remain negative unless the bondholders block fosun's involvement. Having them as majority shareholder in TO and minority in airline removes any bidding tension for the company in the future if the company manages to turn it around
I am negative on the name - just saying they aren't as bad as some in the market were expecting.
I think we are on the same page - Don't think there is value for the bonds at current levels either.
Quisty - When I refer to Q3 I am referring to April-June, the Company's Q3.
Quisty,
Summer 2019 75% sold, ahead of last year. That is better than expected.
Group Airline bookings are down 3% overall, with pricing up 2%. Excluding capacity reductions to the in- house tour operator, Group Airline bookings are up 11% reflecting higher sales to third-party tour operators, particularly in Germany, and seat only in all markets.
Better than expected.
Margins are under pressure. But Q3 isn't that important. It is all about what happens between now and September and the remaining 25% of capacity.
Quisty - did you think they are bad numbers - worse than market expectation?
1 - Multiple bids was probably correct but not at high enough levels.
Also, Look at the decline in the market (Lufthansa and Ryanair and EasyJet profit warnings since they said there was multiple bids) will have reduced the value of any of the bids. So not corruption, just not high enough of value to make it worth while.
2 - Nordic business they were rumoured to have a bid for was the Tour Operator not airline (correct me if I am wrong). Again, they didn't say value of the bid.
3 Fosun are part of the discussion, but they aren't confirmed as the main shareholder. All they have done is say they want to own majority of the Tour Operator. They have lost their existing investment but are willing to make a new investment to achieve that.
They are likely to be in peak cash at the moment, and the limited Q3 updates are not that bad. Problem is we have no way of guessing the Q4 (July-Sept) quarter.
Why do you all insist in using the word corruption?
Where is the corruption? The business has underperformed. People made bad investment, take some responsibility please.
You are letting emotions rule your vote on admin or accepting a deal. Thankfully, professional investors will do what is their fiduciary obligation.
Accept you have some responsibility and now you have to accept your current position.
If you are bullish on the company, post restructuring, buy the bonds.
Company instead of computer*
JTMac,
So instead of taking blame on yourself for making a bad investment decision, you are going to suggest the is fraud and corruption.
Businesses fail. People have been pointing this one as potential failure due a long time. Fosun has lost out significantly too.
Difference is they appear willing to invest more (a portion of£750m) to try get majority of the tour operator.
The business needs new cash, how it needs£750m is beyond me, but they do. Whoever is willing to our up this money into a computer that has significant amount of the debt cancelled will get the lion's share of the equity.
Save your money, sell your shares and buy into the new entity via the bonds if you wish to
Highly risky and I wouldn't.
Fosun will be restricted. They likely know the actual results and are in discussions with the company and its lenders. So not them buying.
No conspiracy, they have lost their initial investment, but willing to invest more and take control
I think people on here need to sit down and think what other options were available to the Board to get out of this situation.
They tried to sell the airlines and I think it is safe to say they failed to get a reasonable price to achieve any meaningful debt repayment. (So was the leaked rumours of £700-1bn only talk to try raise some bidding tension)
The banks were uncomfortable with the level of leverage and the Company needed waivers to get round breaches in covenants. Although the £300m was not subject to conditions of sale of airline, it was likely subject to other conditions, including taking security over some assets. (this would have the affect of making the bonds junior to the banks - they currently are pari-pass). Another question is was £300m sufficient. It appears not as the company now saying they want £750m to turn the Company around.
The introduction of £750m (which will likely be a combination of debt and equity) is only likely to materialise when existing debt is written down substantially. So in this scenario, where the bonds and bank debt is to be equitised it is right that they get the majority of the equity and shareholders get zero. (Remember bonds and bank debt have a higher ranking claim on the company).
If people think this Company has value, it should buy the bonds at 35% of face. The bonds are likely to get significant equity and will benefit from any upside in the turnaround of the company. I personally think we need to find out more information before one can make an informed decision.
The equity has some residual value (nuisance value if you want) as the Company will want to have a consensual deal. Admin (even if it is pre-packed) has many pitfalls and likely value destruction for all stakeholders. But I think it is very small and I don't think equity holders are in a great negotiation position.
Fosun is not going to buy the outstanding equity only for it to be written down during a debt for equity scenario. In any case, they are restricted now and are likely to want to provide some of the new money to secure majority stake in the Tour Operator.
Good luck all - if bullish on the entity, buy the bonds. I would wait, but you could do some work and see minimum size, trading ability etc.
Jedclampit,
You are assuming they could sell the airline business at a reasonable price. It now appears they couldn't. Was all that press speculation attempts by the Company and their advisers to drum up a competitive environment in order to get bids higher.
You have all the bank debt to be converted into equity - bonds likely to get sod all, so not holding out much hope for the equity holders. Note they still need an additional £450m since they spoke in May - £750m facility versus £300m.
I would exit, put the experience down to bad luck and perhaps try to learn from it. And try to read more of the opposite view to your own.
Can you please repost - I am only seeing a transcript of the Q2 call.
https://www.thomascookgroup.com/investors/reports_presentations
If you want to listen to the call - weblink is on this page.
This is a transcript of the call in May, which caused the bonds to travel further south. I am not sure how you can see any positives in this transcript
(I presume we are looking at the same article).