Thomas Cook looks to China's Fosun to save it

Cornelia Mascio
Luglio 14, 2019

It would also offer the financial flexibility to invest in the business for the future, Thomas Cook said.

Today's news has sent Thomas Cook down below a critical support level, with the weekly chart highlighting the firm break through 9.2 to create a new record low.

Fosun Group is already a minority investor in Thomas Cook - with a stake of about 18 percent - and owns French luxury holiday resort group Club Med SAS, which it bought for more than US$1 billion in 2015.

"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", Mr Fankhauser added.

'After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing, the Board has chose 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 world's oldest travel company has been battered by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, which deterred bookings.

The company added that the sale process for its airline had been "paused" while the funding takes place.

The proposal, which Fosun said was subject to due diligence and further talks, envisions that a significant amount of its external bank and bond debt will be converted into equity.

A spokesman for Fosun said: "Fosun is a shareholder in Thomas Cook, because it is a British company operating in the global travel industry, in which we have extensive experience".

On Friday, Thomas Cook stunned the market when it unveiled a debt-for-equity swap deal that would see conglomerate Fosun and its lending banks inject £750 million into the business to stave off a collapse.

Thomas Cook is admitted to staff that its cash injection from Chinese tour operator Fosun will leave current shareholders with little or no value in the Thomas Cook shares they own.

Thomas Cook's stock has halved in value so far this year, with a current value of about Dollars 255 million. Its higher-margin airline business - which includes German holiday carrier Condor - had revenue of £3.5 billion.

Tourism is viewed as key to China's shift towards a more consumption-driven economic model from an investment and export-led one, but buyers like HNA Group and Fosun have faced scrutiny from Beijing for debt-fuelled, big-ticket foreign deals.

The proposal comes a month after it said it was in talks with Fosun following a preliminary approach.

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