Thomas Cook future assured with £900m rescue deal
Shareholders have seen the value of their equity fall by 93 per cent in a year
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Your support makes all the difference.After a difficult summer for the travel industry, with weak demand and Brexit uncertainty, Thomas Cook’s future now appears to be assured.
To the relief of the firm’s 21,000 employees, and millions of travellers with forward bookings on Thomas Cook, the Chinese firm Fosun will inject £450m. It will acquire at least 75 per cent of the group’s tour operations and 25 per cent of Thomas Cook Airlines.
Conversely, Thomas Cook’s creditors will also pump in £450m and convert debt into equity in the company – 25 per cent of the tour operation and 75 per cent of the airline.
In the autumn, travel firms’ cash flow traditionally switches abruptly from positive to negative. The aim is for the funds to arrive by early October, before the winter season begins.
Thomas Cook said: “The execution of the transaction remains subject to a legally binding agreement being reached amongst the parties to the recapitalisation plan and, where appropriate, the group’s other key stakeholders.”
The share price fell 14 per cent in early trading to 6p. Existing shareholders in Thomas Cook have seen the value of their investments fall by 93 per cent in the past year.
In August 2018, 200 Thomas Cook shares were worth the equivalent of a week’s package holiday in Greece in September. Today they would not even cover the £13 Air Passenger Duty to board a plane.
Thomas Cook was the pioneer of organised travel, beginning with a Temperance outing from Leicester to Loughborough in 1841.
The firm had been trying to find a buyer for its airline in order to shore up its financial position, but was not able to do so. European Union rules on airline ownership limit the shareholding by non-EU companies such as Fosun.
The Chinese firm is already Thomas Cook’s largest shareholder, with 18 per cent of the equity.
It is headquartered in Shanghai and listed on the Hong Kong stock exchange. It cites its vision as “creating a global happiness ecosystem fulfilling the needs of one billion families in health, happiness and wealth”.
Fosun owns Club Med, the luxury Atlantis Sanya resort on Hainan Island in China, and a Dead Sea mineral skincare brand, Ahava.
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