Thomas Cooked?

When, on 25 November, Thomas Cook said that it needed to borrow more from banks on looser terms only a month after previously renegotiating its loans, we quickly moved our view on its shares to a 'sell'. The share price bounced strongly after the banks speedily came to the group's aid, taking only a 5 per cent claim on the company's equity. Nevertheless, we find little cause to change our stance. While the upside to the share price could be massive if a trading recovery extinguishes worries about the debt, we think the odds remain stacked against equity holders.

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