Sectors > Top Reports > Thomas Cook Memo 040619

Thomas Cook Memo 040619

Buy € 6.25% 2022 Senior Unsecured Bonds. Equity Has Speculative Merit
PUBLISHED: 04 June 2019
PAGES: 260
PRODUCT CODE: TCG0001
SUBMARKET: Top Reports, Top Reports,

£2,670.00

Why Read?

  • Understand the various going-concern break-up and administration / CVA scenarios for Thomas Cook
  • Understand whether there is a viable tour operator business that can be salvaged
  • Understand how to model working capital and liquidity
  • Understand the value of the Group Airline business and its constituent airlines 
  • Understand the value of the Northern European business
  • Understand the potential synergies for Fosun in owning both Thomas Cook’s Group Tour Operator and FTG’s Club Med business
  • Understand the potential working capital shock from changing hotel supplier payment terms, withheld customer pre-payments by credit card companies and lower customer bookings
  • Understand what Thomas Cook needs to do rapidly and aggressively to maintain its existence 
  • Understand how much upside there is from the own brand hotel strategy, complementary offering of Expedia’s city breaks and a more radical approach to shifting channel mix from stores to online
  • Understand the Pro Forma financial position of the continuing Group Tour Operator post any sale of the Group Airline and/or Northern Europe business
  • Understand the asset sale covenant in the senior unsecured bonds
  • Understand the different recovery rate scenarios across administration / CVA depending on priming and timing of default
  • Understand the potential tactics of active distressed investors 

What’s New?

  • Quarterly liquidity projections based on a detailed working capital model
  • Valuation of the Group Airline and its constituent airlines
  • Valuation of the Northern Europe business
  • Insight into Fosun’s Club Med business and potential synergies with Thomas Cook
  • Granular Adj EBITDA estimates across the business – within the Group Tour Operator: across source markets; across hotel formats; within the Group Airline: across the regional airlines
  • Recovery rate estimates
  • Key valuation sensitivities 
  • Customer price comparison analysis – Thomas Cook vs Tui, On The Beach and unbundled package components (hotel, flight and ancilliaries)

Questions Answered

  • When will Thomas Cook run out of liquidity including with an extreme working capital shock in H2 2019?
  • What are the different parts of the business worth in a break-up, who would buy them and why?
  • Is there more margin pressure to come from structural decline / online price transparency?
  • What is the valuation upside if Thomas Cook can sell sufficient businesses to generate liquidity and time to execute its own brand hotel strategy?

View, Variant Perception & Recommendations



  1. Business Overview

  2. Scenarios

  3. What Went Wrong In H1 2019 & H2 2018?

  4. Structural Decline?

  5. Financial Projections, Valuation & Sensitivity Analysis

Thomas Cook


Tui


On The Beach


Expedia


Booking Holdings


 


 

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