Struggling travel company Thomas Cook Group (TCG) announced that it will need a further £150m for liquidity purposes for the winter 2019-20 season, in addition to the £750m capital injection announced in July. The company is currently in discussions with Fosun Tourism Group, its largest shareholder, together with its lenders on the terms of the transaction, including ownership restructuring of its tour operator and airline businesses, which will also see a “significant amount” of its £650m of external bank debt and €1.15bn (£1.07bn) of bond debt converted into equity, thereby diluting existing shareholders significantly.
Existing bondholders required more liquidity assurance for the upcoming winter season, given poor economic conditions and continued weak trading. Thomas Cook last provided a trading update in July when it announced the initial £750m capital injection. At the time, summer holidays for 2019 were 75 per cent sold, but tour operator bookings were down 9 per cent. Margins were weakening as intense competition across the European travel sector resulted in high levels of promotional activity across the business. As a consequence, underlying operating profit is expected to fall short of the comparable second half period.