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Published on Monday, April 15, 2019

Thomas Cook admits it may have breached its own borrowing rules







Concerns for Thomas Cook's financial situation have heightened after it told shareholders it might have been regularly in breach of its own borrowing limits.

In a stock exchange announcement on Friday, it said the Board has received external advice that its current interpretation of articles relating to borrowing limits might have 'in certain periods in the past' led the company 'inadvertently' permit a level of borrowings 'in excess of the limit permitted'.

"An implication of the possible technical breaches is that the Company would be unable to roll-over existing credit facilities for the purpose of day-to-day treasury management, as it has done in previous years," the statement said.

It is now asking shareholders to suspend the borrowing limits for a limited period at a general meeting on April 29.

The issue was raised as part of Thomas Cook's strategic review of its airline to help reduce debt.

The group announced in February it was looking to sell off its airline as it struggles to cope with the impact of Brexit uncertainty, last summer's heatwave in the UK, and changing consumer habits.

Richard Clark, an analyst at Bernstein, told the Financial Times that selling off the airline would allow the rest of the Thomas Cook business to be bought by non-European investors.

Under EU rules on airline ownership, European investors must own more than half of an airline or risk losing flying rights in Europe.
 

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