A “substantial agreement” over key commercial terms designed to recapitalise and restructure Thomas Cook Group was revealed today.
The rescue deal will see Chinese Club Med owner Fosun Tourism Group and the company’s core lending banks inject hundreds of millions of pounds to keep the travel group afloat.
Under the plan, conglomerate Fosun will contribute £450 million of new money to acquire at least 75% of Thomas Cook’s tour operations and 25% of the group’s airline.
Key lending banks and noteholders are targeting in aggregate £450 million of new money to the group and converting their existing debt into approximately 75% of the equity of the airline and up to 25% of new equity in the group tour operator.
The plan is due to be implemented by early October, ahead of the winter low season.
However, the recapitalisation remains subject to a range of issues including credit and investment approvals, agreement on group performance conditions and due diligence.
Thomas Cook directors plan to maintain the group’s stock market listing
“However, the implementation of the proposed recapitalisation may, in certain circumstances, result in the cancellation of the company’s listing,” a company statement said this morning.
A £300 million secured bank financing facility announced in May will be allowed to lapse “reflecting the extensive progress made on agreeing key commercial terms with the group’s core lending banks and noteholders regarding the injection of £450 million of new money into the business in connection with the proposed recapitalisation”.
A previous proposal saw Thomas Cook targeting a £750 million cash injection with Fosun and bank lenders.
But Fosun had cautioned last week that the re-organisation of Thomas Cook “involves much difficulty”.
Thomas Cook incurred a pre-tax loss of almost £1.5 billion for the winter half year period to March 31.