The complex story behind Cook/Co-op joint venture's £6m profit

TCCT Holdings Ltd is based offshore in Jersey, and is the parent company of another entity, TCCT Retail Ltd. This is the company that now effectively owns the Cook/Co-op/Midlands retail network.

On September 1, 2012 TCCT Retail Ltd acquired the “travel related trading activities” of both The Co-op and Midlands, having already acquired Cook’s high street travel business from another company within the group using the proceeds of loan notes (effectively an IOU). TCCT Retail Ltd is liable to pay interest on these loan notes, which amounted to more than £6m for the 2013 financial year.

This “interest” constitutes the joint-venture’s only income, not the sale of holidays as one might expect.

In fact, the retail travel agency business (TCCT Retail Ltd) is struggling. Despite revenues rising 14% to £342m it posted an operating loss of £24m, up from a loss of £16m in the prior year.

The total comprehensive loss for the year was £59m. Its net liabilities run to £218m.

In a statement to TTG, Cook said: “We will provide an update to the market on our financial performance next month. The historic results of TCCT Retail Ltd were impacted by exceptional restructuring costs that are explained elsewhere in our investor information. The underlying retail business is profitable.”

The merger of the three companies’ high street travel businesses was said at the time to be a “long-term” proposal.

However, just two and a half years after the deal was agreed, Cook announced plans to close 195 stores. It now has 855 retail outlets, down from 1,089 in 2012.

According to a document released by Cook at the time, on the fifth anniversary of the merger, The Co-op has the option to sell its share, while Cook has the option to buy Co-op’s shares. It also said that after four years, should the total dividend payments to the Co-op be less than £40m, Cook will cover the shortfall.