Thomas Cook told to find an extra £200m to secure future

posted on 20th September 2019 by Justin Burns

Thomas Cook Group has been told by its lenders that it has to find an extra £200 million in extra funding to secure its future, putting the tourism operator at risk of collapse if the cash is not found.

The cash-strapped operator had hoped that this week it would seal a rescue deal led by Fosun Tourism Group, but banks have told Thomas Cook that it must come up with the additional money to allow for contingency funding during the winter months.

Thomas Cook had agreed an agreement last month for main shareholder Fosun Tourism Group to inject £450 million worth of capital, in return for at least 75 per cent of the equity of the group’s tour operator arm and 25 per cent of the group’s airline.

The agreement will see the Chinese tourism group will take control of the business at the expense of other shareholders.

Thomas Cook’s lending banks and bondholders would then contribute a further £450 million for 75 per cent of the airline and up to 25 per cent of the tour operator business.

Thomas Cook Group said in a statement that discussions to agree final terms on the recapitalisation and reorganisation of the company are continuing.

The statement added: “These discussions include a recent request for a seasonal standby facility of £200 million, on top of the previously announced £900 million injection of new capital.

“The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery. The Company will provide further updates in due course.”

In May, the cash-strapped group reported a loss before tax of £1.45 billion for the six months ending 31 March 2019. Revenue was down £208 million to £3.01 billion.

The airline arm of Thomas Cook operates a fleet of 34 aircraft and flew just over eight million passengers in 2018, to leisure destinations from the UK and has its main bases at Gatwick Airport and Manchester Airport.