Ailing First Choice gives profits warning bonus hopes
Tuesday 03 October 1995
Rival operators Airtours and Thomson Holidays revealed six weeks ago just how badly a year that began with such high hopes has ended.
First Choice had to contend with extra costs of restructuring, rebranding and remarketing its tours as well as the decline in consumer confidence and the impact of a hot summer at home.
But analysts who talked then to First Choice still had forecasts of pounds 17m- 20m on their books yesterday morning.
The warning sent shock waves through the market, coupled as it was with a deeply discounted rights issue of two new shares for every five at 60p, raising pounds 44.1m net to fund three acquisitions and ensure the group could meet the operating margins needed to maintain market share in 1996-97.
The final dividend of 2.45p is maintained on new and existing shares, but the shares fell a further 18p to 70p.
Thomas Cook, which took a 21 per cent stake to help fight off a bid from Airtours in early 1993, will not take up its rights, which suggests an early parting of the ways. But it will not sell its shares in the market for at least six months.
Its entitlement has been placed in the market and the balance of the rights issue is fully underwritten.
The issue will finance the acquisition of Skibound, the leading operator in the UK schools and group skiing market, for an estimated pounds 23m in cash, of which pounds 9.2m is payable on completion, the balance in 1996.
Skibound made pounds 4m before tax on a turnover of under pounds 40m in the year to 30 April.
The acquisition will help reduce reliance on summer profits and make better use of aircraft capacity
First Choice is also buying JWT, the third largest tour operator in Ireland, for pounds 5.4m, and the balance of the Vancouver-based Fiesta West for an estimated pounds 8.7m.
But the future depends heavily on the 1996 summer season, which yet again has started well. Baron expects the market to be static but relies on industry-wide capacity cuts of 8-10 per cent to reduce discounting and restore margins.
Investment Column, page 18
- 1 Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
- 2 Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
- 3 Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
- 4 Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
- 5 New Tricks: Dennis Waterman to leave the show after a decade of crime-solving
Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Ice Bucket Challenge: US firefighter Tony Grider dies after participating in charity craze near power lines
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...