Fosun poised to take control of Thomas Cook

Galtero Lara
Julio 14, 2019

"Given the current environment, it may have been harder to offload the airline than thought, at least at a price that worked for Thomas Cook", he said.

'While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees, ' chief executive Peter Fankhauser said.

'After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing, the Board has made a decision to move forward with a plan to recapitalise the business, supported by a substantial injection of new money from our long-standing shareholder, Fosun, and our core lending banks, ' Thomas Cook CEO Peter Fankhauser said.

The 178-year-old London-listed company has been battered by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, which deterred bookings.

Fankhauser said the sale of the airline business was paused while Thomas Cook focused on the refinancing, adding it was "too early to speculate on what will happen on the airline review".

Shares in Thomas Cook were trading down 46 per cent at 7.1 pence today, valuing its equity at £109 million (RM562 million).

Under the proposals, Fosun will take a majority stake in the tour business and minority stake in its airline in return for the cash.

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A year ago Thomas Cook's share price stood at 104p, and the stock ended their first day of trading after listing on the stock market in June 2007 at 320p.

"Fosun is hoping that Thomas Cooks' brand name and global reach will expand its business among wealthy Chinese tourists", Andrew Collier, managing director at Orient Capital Research, told Bloomberg News.

It is one of China's so-called "grey rhino" companies - along with Wanda, HNA and Anbang - that have come under growing scrutiny in the last few years from mainland authorities wanting to crack down on debt-fuelled foreign acquisitions.

As part of the deal to keep afloat the package holidays firm is suggesting a debt-for-equity swap with lenders that will likely virtually wipe out what's left of any value for now shareholders.

The proposal also envisaged a significant amount of the company's external bank and bond debt being converted into equity, to be agreed following discussions with financial creditors.

Fosun said earlier this year that it will adopt an asset-light strategy and run under management contracts the Club Med resorts it plans to launch in China and other countries.

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