THOMAS COOK(TC) - RESTRUCTURING SCHEME RELATED TO QUESS CORPORATION(QC)?** ****** If an investor buys 100 shares of TC at CMP of Rs. 270/- , he pays Rs. 27000/-, for which he gets 20 shares of QC valued at Rs. 21000/- at CMP of Rs. 1050/-. Thus your residual 100 TC shares will cost you Rs. 6000/- at Rs. 60/- per share. On record date, the price of TC will also fall as QC is a major contributor to the Operating Profit of TC. Looking at the current paid up capitals of both cos., holding of TC in QC and market prices of both the shares, value of QC per share of TC comes to about Rs. 205. Taking holding Co. discount of 40%, the QC shares holding by TC could be considered to be currently discounted by about Rs. 80/-. It is this discount which is likely to disappear immediately on implementation of the restructuring scheme, pushing the TC price by the same amount. I would therefore expect effective price of Rs. 350/- for TC. ( Value QC at 21000 and TC at 14000). Thus purchase of TC at CMP of Rs. 270/- can yield a return of about 30% on implementation of the scheme in next 3 to 6 months.
How did you calculate the swap ratio?
No. of issued shares of TC ~ 36.70 crs. No. of QC shares held by TC ~7.13 crs. Swap ratio 36.70/7.13 ~ 5.15.
Will there be any tax applicable to Thomas cook (deemed dividend tax) …If yes, what will be the quantum? This distribution of QC shares tantamount to distribution as dividend and hence 15% tax will be applicable…that would be on the historical cost or the current market price of Rs 1050? This could be a big deterrent. Views invited…
How can this be compared to dividend. Just one layer of holding is getting smashed. You still continue to have equity interest in quess but it will be direct.