Could tax-payer bailed out banks bring down Peterborough's Thomas Cook?

Galtero Lara
Setiembre 20, 2019

It is understood Thomas Cook had found a third party to provide the extra £200 million, but is now rapidly hunting cash after that party backed out.

Thomas Cook had warned in an update in August that the rescue deal was expected to significantly dilute its existing shareholders and could result in its delisting from the market.

"Discussions to agree final terms on the recapitalisation and reorganisation of the Company are continuing between the Company and a range of stakeholders, including its largest shareholder, Fosun Tourism Group and its affiliates ("Fosun"), the Company's core lending banks and a majority of the Company's 2022 and 2023 senior noteholders".

Thomas Cook said the £200 million needed would be a "seasonal standby facility", on top of £900 million it had already raised from Chinese firm Fosun and its lenders.

Thomas Cook has struggled with competition in popular destinations, high debt levels and an unusually hot summer in 2018 which reduced last-minute bookings.

Earlier this year, Thomas Cook announced it would close 21 stores, including those in Colchester and Stevenage.

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A spokesman for RBS said the bank did not "recognize this characterization of events" and was working with all parties to "try and find a resolution to the funding and liquidity shortfall at Thomas Cook".

Their call comes after a last minute demand by Thomas Cook's banks, including RBS and Lloyds, that the cash-strapped tour operator stump up an extra £200 million.

If that deal is not finalised before a creditor vote on September 27, then holidaymakers could be facing the second major collapse of a tour operator in as many years, after the failure of Monarch in 2017.

Anxious customers and family members of holidaymakers who fear being stranded overseas have contacted the touring operator on Twitter to find out what security Thomas Cook will offer.

If Britain does the same for Thomas Cook's customers, then the 160,000 Britons overseas that would need repatriation would eclipse the number brought home after Monarch's collapse.

British pilot union BALPA, whose members have previously gone on strike in a disagreement over pay with Thomas Cook's management, have supported the restructuring and urged the banks and government to support the travel group. Asked about Thomas Cook, he said: "We do not speculate on the financial situation of individual businesses". Only the headline has been changed.

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