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UK Sparks: Thomas Cook Seeks Capital Injection; Lookers Warns on Profit

Edison

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Thomas Cook has announced plans to recapitalise the business citing a “progressively more challenging” operating environment in Europe. The travel group is looking for a £750m capital investment to help them trade over the winter season and is in advanced talks with China’s Fosun Tourism (their largest shareholder) and core banks, it said.

The proposal would also see the Chinese investor own a controlling stake in their tour operator business and a “significant minority interest” in the airline unit. It would also see some of Thomas Cook’s external bank and bond debt converted into equity. Though shareholders will be “significantly diluted,” the company said they may still be able to invest alongside Fosun and creditors. CEO Peter Fankhauser said the proposal was a “pragmatic and responsible solution which provides the means to secure the future” of the company.

Elsewhere, car dealership Lookers has warned that underlying pretax profit will be about £32m in the first half of the year, down from last year’s £43m. The company said the UK’s new car market had continued to a decline in Q2, with registrations down 4.6%. They also cited weaker demand in the used car market.

Lloyds of London insurer Hiscox said it’s expecting to deliver a half year pretax profit of between $150 to $170m, which includes a $150m investment return. It also expects Hiscox Retail‘s combined ratio, a measure of profitability, to be within its normal range of 90-95%. Hiscox said the insurance market had seen continued deterioration in 2018 from Typhoon Jebi in Japan and Hurricane Michael in Florida, with loss estimates climbing “materially.”

Finally, emerging market fund manager Ashmore Group saw assets increase $US6.5bn in their fourth quarter to $85.3bn, boosted by $3.3bn of net inflows and a $3.2bn investment performance. The company said client activity levels “remain healthy” and global market conditions improved as US/China trade tensions eased.

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