Travel company Thomas Cook is in talks over a £750 million rescue deal which would give its Chinese investor Fosun a large stake in the company’s tour operator business.
Thomas Cook’s shares hit a record low of 7.1p down by 46% in morning trading, This comes after its stock price decreased by 40% in May.
Peter Fankhauser, the chief executive of Thomas Cook, said: “After evaluating a broad range of options to reduce our debt and to put our finances on to a more sustainable footing, the board has decided to move forward with a plan to recapitalise the business, supported by a substantial injection of new money from our longstanding shareholder Fosun and our core lending banks.
“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.”
A spokesperson 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. We are committed investors, with a proven track record of turning around iconic brands including ClubMed and Wolverhampton Wanderers FC.”
Store closures and cost cutting measures were announced by Thomas Cook earlier this year but the firm said holiday makers could have confidence as it is all ATOL protected. The protection of ATOL means UK travellers on an air package holiday do not lose their money or become stranded abroad if the travel agent collapses.
Under the plans being discussed with Thomas Cook’s banks, most of their debt (£1.4 billion) will be converted into shares.
Fosun is a £74.4bn Chinese investment giant that is listed on the Hong Kong stock exchange. The firm already has an 18% stake in Thomas Cook, but if this deal goes ahead, it would gain a “significant majority” of the firm. They have been a shareholder in Thomas Cook since 2015.
