Thomas Cook investors face a hit on Quess Corp move: Advisory firm

MUMBAI: Thomas Cook’s proposal to renounce shares in the rights issue by subsidiary Quess Corp is a loss to the travel operator’s shareholders, said proxy advisory firm SES. Quess is coming up with a rights issue of 25 lakh shares that Thomas Cook has proposed to renounce in favour of Quess Corp’s founder promoter Ajit Isaac at par.

The company has not disclosed the consideration of renouncing shares in favour of Isaac. If the renouncement is done without consideration, Thomas Cook could lose anywhere between `150 crore and `500 crore approximately depending on the fair value of shares of Quess, said SES.

An email query to Thomas Cook on the matter went unanswered. Thomas Cook has plans to raise `700 crore via Quess Corp’s IPO and is considering a 25% dilution; the share price could be more than `586, SES said. “Shareholders of Thomas Cook may lose in a huge manner if Thomas Cook lets go of the rights issue,” said JN Gupta, MD, SES.

“There is undue financial advantage to Isaac if this proposal goes through. Quess may not launch its IPO in the next couple of months due to certain issues but even if it does in the next couple of years, shareholders of Thomas Cook would be the biggest losers of renouncing of rights issue.” Thomas Cook’s promoters have not stated their plan to vote, said SES.