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Thomas Cook agrees recapitalisation terms

The travel group has agreed terms of a dilutive recapitalisation
August 28, 2019

Thomas Cook's (TCG) shareholders dumped their stock in the beleaguered travel group after it announced details of a bailout with its largest shareholder, China’s Fosun Tourism Group, its core lending banks, and most of the 2022 and 2023 senior noteholders.

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The agreement entails a £450m cash injection from Fosun in return for 75 per cent of the tour business (subject to the receipt of anti-trust approvals) and 25 per cent of Thomas Cook’s airline. The core lending banks and noteholders have pledged another £450m in exchange for the residual 25 per cent and 75 per cent stakes in those businesses.

Management reiterated that other shareholders would be given the opportunity to participate in the recapitalisation by way of a parallel investment and/or conversion of senior creditors “on terms to be agreed”. But the bottom line is that existing shareholders will be subject to a significant dilution of their holdings. Thomas Cook is looking to get the deal rubber-stamped by October, with agreement required by all parties to the recapitalisation and other key stakeholders.