The situation has become ever more dire at Thomas Cook (TCG), as the travel group confirmed speculation that it requires £200m to get through the winter season, in addition to the £900m of funding previously announced. This capital injection will be significantly dilutive to existing shareholders, but the alternative is that the company could face administration.
In late August Thomas Cook announced that its £900m recapitalisation would be split into two parts. Fosun, its largest shareholder, would provide £450m cash in return for 75 per cent of the tour business, so long as this received approval from anti-trust authorities, along with 25 per cent of Thomas Cook’s airline. Core lending banks and noteholders have agreed to put up another £450m in exchange for the remaining 25 per cent and 75 per cent of the tour business and airline, respectively. Discussions regarding the final terms of this recapitalisation and reorganisation of the company are still underway.
Shareholders will have the opportunity to get involved in the recapitalisation via a parallel investment and/or conversion of senior creditors. These terms are yet to be worked out, but the company is hoping to finish these negotiations by October.
