Mumbai: Thomas Cook (India) Ltd., India’s leading integrated travel services company, has received approval from its Board of Directors for buy-back of up to 26,086,956 fully paid up shares at a price of Rs. 57.50 per share for a maximum aggregate amount of Rs. 150 Cr. The buy-back price per share of Rs. 57.50 is at a premium of 40% over the closing market price of the Equity Shares as on the date immediately preceding the date of the intimation of the Board Meeting.
The buy-back Record Date has been fixed as March 7, 2020 and the transaction will be entirely funded by internal accruals.
The perceived negative impact of the Corona Virus on travel businesses, has affected the Company’s share price and hence, the buy-back signals to shareholders the Management’s confidence in the strong fundamentals and growth prospects of the Company.
Other benefits of the buy-back process are:
1. The process will help the Company return cash to its shareholders enhancing the overall return for them
2. The process involves a reservation of up to 15% of the equity shares for small shareholders which would benefit a significant number of the shareholders
3. The buy-back is expected to improve the Company’s financial ratios like Earnings Per Share, Return On Capital Employed and Return On Equity by reduction in the Equity Base of the Company, leading to long term increase in shareholder value
4. The buy-back gives an option to shareholders to participate and get cash in lieu of Equity Shares to be accepted under the buy-back offer or choose not to participate and enjoy the resultant increase in their shareholding, post the buy-back offer, without additional investment.
Mr. Madhavan Menon, Chairman & Managing Director, Thomas Cook (India) Limited said, “The buy-back scheme is primarily intended to increase shareholder value as the income arising to the shareholder on account of buy-back of shares is exempt from tax. We have ensured that the interests of our small shareholders are protected via the reservation process and additionally, the flexibility in our buy-back scheme offers our shareholders the choice of cash via participation or a resultant increase in their percentage holdings with no additional investment. The buy-back will signal confidence to our shareholders and unlock the underlying value of the diversified Thomas Cook India Group.
The combined impact of a sluggish economy and difficult trading conditions due to the prolonged direct impact of the Corona Virus, have resulted in slowing demand across our businesses. Given that this coincides with the peak booking season for the summer vacations, we anticipate a cascading negative impact on our results.
That said, we are confident that our strong fundamentals and financial position will see us through the current challenging environment and we are focussed on taking all necessary measures to ensure our sustainability and long term growth.”