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https://vimeo.com/347634615/c40e52777e

Even if the business converts only 50% of its gross debt to equity at a price of 5p, which it may not get, they will need to issue 17bn new shares dwarfing the 1.5bn shares in issue currently. This is a dilution of more than 90%.

It is highly doubtful that 5p would be the new equity price let alone some of the other 'premiums' some SHs think they'll get (7p to 35p). Some would say that is a pump and dump manoeuvre by day-traders.Seems strange to pump this stock for a small wing trade profit to current SH's who've lost already as the opportune time to average down. Even if the new equity was issued at optimistically 3p the sp would inevitably fall below this and then would be the time to average down with greater certainty.

However if you do swing trade best to close your position before COP. You wouldn't want to hold this hot potato when the morning RNS drops. Best of luck!

When the CFO states very clearly, whilst sitting alongside the CEO, that they see that the results of the recapitalisation will be "that the stock is traded down to nothing" this is not the same as suggesting that the new equity will be issued at a 38% discount from the current sp. There is a very clear language being used and not to set them up to make them look good in case 'something' happens. Current SH will be owners only of the separated airlines (not the travel group) which was valued at circa £600m earlier in the year as part of a strategic review. This minority ownership will be then under review whilst it is decided if the separated airline business be still listed or sold.

Although the sp rise is novel it is hard to see what has changed. The CFO and the CEO have tried to make it very clear in the video <https://vimeo.com/347634615/c40e52777e> to shareholders what the impact of the recapitalisation will be for current shareholders. So if you look at the video @03m the CFO (alongside the CEO) says that the impact of the recapitalisation will be that the chares "will be traded down to almost nothing". That does not mean that the business will stop. Indeed the video explains that operationally the business will be in a better place with a reduced debt burden but at the expense of existing shareholders. Load factors, customer bookings and TV adverts will not change the investor impact.

Shorts disclosed to FCA are still at 7.88% down from their peak of 8.73% with the major change of TT International closing 0.5% of their shorts but still holding 2.43. AQR Capital Managements similarly small changes from 0.67% to 0.58%.

Swing traders are obviously confusing the picture for LTHs but I wouldn't buy into a recovery yet till the recapitilsation is complete and plans for airlines made clear. I suspect that some investors will be sucked in before a crash here.

Post Sunday lunch so let's keep the maths simple...

If I was an Instutional Investor (II) and I had bought 1m shares at 10p. This would have cost me £100k. The most obvious thing you suggest is that he should sell at 4.8p and at least keep £48k rather than loosing a further £38k plus if new shares were financed at the circa 1p level and the sp dipped below this level.

However it may also be rational to continue to hold as this would allow him to take part in the refinancing at this lowever level. So for example if the Comapny said for every share the II currently held it allows him to buy a further 10 shares in the refinancing. Then for his current 1m shares h could buy a potential 10m shares. These new shares would be worth 1p and would cost him £100k.

If the new shares then increased their value to 2p his trading ledge would be £220k. He would have made back the 80k that he lost on his original £100k investment and 1m shares and be £20k in profit overall.

However for the II to be able to do this they need to have a further £100k to invest and the time to see it through.

This may work out for the II but it DOES NOT protect the PI if they are not invited to participate or if they do not have further free funds to invest for an indefinite amount of time. PIs will still be significantly diluted

Once again apologies for any dodgy maths as it is post Sunday Lunch.

Paul,
I think some of these colourful posts continue to distract shareholders from the central decsion following the Company by giving fair warning to PIs that a D4E deal is the preferred solution: What is the scale of the dilution and at what price will the new shares be priced?

The variable of how much debt is swapped for equity and at what price can change significantly the scale of the dilution.

Some suggestions that the Company may be taken private can theoretically happen but the airlines must be majority owned by European Union nationals to operate intra-EU flights so the disposal of the unit would be necessary before a takeover from a suitor such as Fosun. Also the Company has said that though the are valued at an EV (enterprise value) of £592m their disposal would be dilutive to earnings hence D4E the preferred option.

Given the scale of the dilution and the number of shares that would thereafter be in circulation it is suspected that at some future point there will be a share consolidation. I suspect that the remaining Institutional Investors still continue to hold is because this may qualify them to buy new shares as a X multiple of their current holdings. This however DOES NOT insulate normal PIs from share prices falls from a massive share dilution. But who knows and whether PIs would be offered a similar option and whether they would want to.

Post recapitalisation the recovery will be determined by sentiment following the dilution and the revised corporate strategy. The current swing trading I suspect is as confusing to PIs and giving false sense of confidence. However given that the Company has stated that D4E is the preferred option then the key question for current PIs in deciding to hold should be scale of dilution and their issue price.

I think this was misrepresenting some impartial analysis in this piece.

The value of the article was that it was outlining the dangers to current shareholders of the proposed D4E share dilution...

"If we assume the business converts around 50% of its gross debt to equity, the company will have to issue shares equivalent to £850m. At a price of 5p, I estimate the group will need to issue 17bn new shares to meet this target. With just 1.5bn shares in issue currently, this implies each share’s interest in the business will be diluted by more than 90%."

This scenario above assumes however the new equity will be issued at current prices and only 50% of gross debt will need financing. Change the parameters of the sp and the gross debt financing or even debt forgiveness/write-off and the scale of dilution changes quickly.

This is the key danger for current shareholders and the key determinant to continue is the size of the dilution and what price will the new shares be issued at? Current holders would then need to decide how long the shares willl take time to recover and the revised corporate strategy? This sentiment will be determined by the scale of the dilution which will be a shock when it comes but preferred to administration. The current confidence in the sp suggesting that shares would be issued at current and higher levels I would argue to be misplaced given by even the Company's own formal statements and the RNS.

I am not sure whether the timescale suggested till September is accurate. But it seems day traders are using the time for swing trading.

When do people think they'll be further news regarding the financing and D4E?

Swing day traders seem to be playing a bold game here during the interim. Think some might get caught holding a hot potato.

My apologies. Beware the dangers of posting before the 1st cup of coffee...

Figures corrected as below:
£750m cash injection at 1p per share would see 7,500,000,000.00 new shares issued. This would represent a 488% share dilution and mean 9,036,000,000 shares would be in circulation from the current 1,536,000,000 shares.

At 4p for the new shares the cash injection would result in 1,875,000,000.00 new shares. Resulting in a revised 3,411,000,000 shares in circulation or 122% share dilution.

What some are hoping by buying or averaging down at these levels is that the release of the D4E and results will bounce the shares to new highs from current levels rather than tending to the shares to slip towards or below the new placing price.

Apologies once again :-(

There's a lot of fantastical scenarios posted here. But this was a very sensible post for LTHs to understand and make their final decisions on. The key question for them to determine is if an administration is avoided at what price the new shares will be issued at in order to understand the potential share dilution.

So at tme of writing the sp is 4.37p...This give you a market capitalisation of £67m.

If you believe the new shares will be issued at 1p for equity injection on £750k. Then the 750,000,000.00.
This will then increase the number of shares in issue to 2,286,000,000 and represent a staggering 50% share dilution. The share price thereafter would need to rise back to circa 3p in order to achieve your original £67m market capitalisation.

If you are optimistic and think that the new equity will at or around current sp prices then for £750k they would need to issue 187,500,000.00 new shares. This would mean that there will be 1,723,500,000.00 shares in circulation or a more modest 12% share dilution.

The key question on whether you buy, hold or sell now - especially if you bought in June when the sp was 13p - is the price of the new share equity and the scale of the dilution. This will determine the size of the drop. Getting back to 4p is easier from 1p than it is to get back to 13p.

Suggesting that "Institutional Investors will agree a SP way above current SP because Fosun needs their vote" can waste what remaining ammunition LTHs by suggesting they're missing the boat at current sp levels rather than averaging down AFTER the deal is announced. When Moody's cut Thomas Cook's probability of default rating to Ca from Caa2 they stated that they expects "a substantial impairment for existing debtholders" as part of any new financing. This means a write-down. Best await the dilution and pump the recovery post.

It is more common within any debt for equity swap for the sp to tend towards the price agreed before any rally. The company's own RNS says "Existing shareholders will be significantly diluted as part of the recapitalisation"

When the CEO himself uses terms such as "while this is not the outcome any of us wanted for our shareholders" and cancels the Q3 trading update it hardly suggests that when the deal and results are announced the sp will immediately rise rather than reverse. This all is happening against a backdrop of challenging environments (sterling, oil, Brexit) which will reduce margins and bookings.

Like most in the UK I would be sad to see a long-standing brand like TCG fall and hope that its trade creditors are protected throughout. But this deal will take time to broker between pension trustees, bondholders, as well as receive any regulatory and anti-trust clearances or approvals. Day traders ramping to suck in PIs BEFORE the deal is announced (and the more common sp movements) seems as reckless as shorters suggesting there's no future for TCG.

Err..Could you provide me one example where a debt for equity has been done higher to current share prices?

This rally in the sp is indeed surprising given that the BoD have already announced that for the injection of £750 million - just to be able to trade over the Winter 2019/20 season - there will have to be a debt for equity swap which will be negative to shareholders and current prices. Also that it will require a reorganisation of the ownership of the Tour Operator and Airline businesses.

You would have thought that the PIs would have awaited to hear these terms as I am before investing. Whether day traders or desperate PIs looking to average down who knows however some false confidences have been given along with the sunny weather. This blind optimism now seems to be ignoring the financial statements, company announcements, rising price of oil, weakening sterling, good weather drive staycations and increasing risk of No-Deal Brexit. Let's hope LTHs don't add to their losses on false confidences.

Given the inevitable dilution that has been clearly stated to be expected by the business and the stark warnings by the financial press I am surprised that the sp has held up this week. It seems like PIs seem to be gambling on some false confidences on shareholder actions?

The thing which is strange here is that after the initial spike to 16-17p the sp seemed to peak for the rest of the day with some chunky sales and early profit taking. Well done for those fast enough to catch the rise but very strange given that there's an offer on the table and all of the various valuations given the director's recent purchases. Does the sp movement mean that the sale will not happen and there'll be a slip back or is it just a pause whilst the news settles in? MMMM

Seems like a desperate gamble in the absence of even the company RNS which has confirmed that there will be share dilution for the bailout with a restructuring plan to be agreed. This will take some further time to come to market so most observers will be waiting by the side line as the sp will drift towards the placing price agreed.

It will be interesting to see the Q3 results and whether they will be released at the end of July as per last year.

I do think a bounce is possible here however the precusor to a bounce would be the BoD announcing the size of the dilution for the GBP750 million injection from Fosun and other core lending banks.

It also needs to release details of a potential restructure over the potentia separation of the airline and tour operator divisions to allow EU investors to retain majority ownership of the airline.

This should see the Moody's rating go back up to Caa2 from Ca and bring confidence back. Unfortunately without this there is a vacuum

Can only wait to see however there have been two significant shorts taken this week alone against TCG by:
TT International 3.19%
Whitebox Advisors LLC 3.44%

So it's a question of who knows what's right..

Googins I prefer to use handlers and I do not know you personally nor am aware of any private communication sent to you or allowed to be forwarded to you.

The comments and facts related to my post can all be referenced in past RNS and can be fact checked. If you choose to disregard it for emotion that is your choice. This seems like a stressful investment for you.

Given that the market makers seem to have pegged the bid to 10.96 whilst we await the brokers report I haven’t been monitoring this BB but it seems that some people have worked themselves up into a state and are distorting the facts to the detriment of their investment . We
are all awaiting a revised brokers report and this is a frustrating experience for all however some of the emotion seems a bit overdone given that this report should be imminent. Unfortunately when this report is now released some may have switched off due to this negative sentiment
 
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