Thomas Cook in talks with Fosun Tourism for £750m rescue deal

Business | 12 Jul 2019 7:06 pm

Thomas Cook  is in talks on a  £750 million bailout that will give its largest investor Fosun Tourism (1992) control of the indebted British group’s package-tour business, in a blow to other shareholders.

Thomas Cook shares hit a record low of 7.1 pence today in London, falling by 46 percent in morning trading.

Shares in Thomas Cook dropped by more than 30 percent to their lowest level on record after news of the proposed deal, which would also give Club Med owner Fosun a minority interest in Thomas Cook’s airline business.

“This comes at a cost, with a significant dilution for existing shareholders, many of whom have held the stock and supported the business for many years,” Thomas Cook Chief Executive Peter Fankhauser said of the proposed deal.

“However, this proposal is the pragmatic and responsible solution to secure the future of the Thomas Cook business and brand and to preserve as much value as possible for all our stakeholders,” Fankhauser added.

It has yet to be decided whether the company, which employs 22,000 people, will be delisted and go private as a result of the pending deal. Bidders are also circling Thomas Cook’s airline business, The Guardian reports.

Fosun International (0656), co-founded by billionaire Guo Guangchang and one of China’s biggest conglomerates, has spent billions of dollars over the past decade buying healthcare, tourism and fashion companies in the United States and Europe.

“We are committed investors, with a proven track record of turning around iconic brands including Club Med and Wolverhampton Wanderers FC,” Hong Kong-listed Fosun, which already owns an 18 percent stake in Thomas Cook, told Reuters.

Thomas Cook said that the cash from the proposed deal, which would mark one of the most significant purchases of a British company by a Chinese group in years, would be enough for it to trade over the winter season and give it flexibility to invest.

The world’s oldest travel company, which has been hit by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, has also been weighing approaches for its airline business and Nordic operations.

Fankhauser said the sale process for the airline business was paused while Thomas Cook focused on the refinancing. “It’s too early to speculate on what will happen on the airline review,” he said.-Reuters/The Guardian


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