Thomas Cook Group is recapitalizing, investing £750 million (approximately $940 million) in developing the tour operator business of one of its largest players. This was announced by the Thomas Cook press service.
Thomas Cook Group (Group"("Fosun Tourism Group") announces that it is in advanced discussions with the Group's largest shareholder, Fosun Tourism Group and its affiliates ("Fosun"), and Thomas Cook's principal lending banks on key commercial operating principles that will underpin substantial new capital investments as part of the proposed recapitalization and separation of the Group's businesses. Under this proposal, an additional £750 million will be injected into Thomas Cook's businesses, providing the Company with sufficient liquidity for the 2019/20 winter season and financial flexibility to invest in future business projects. Following completion of the recapitalization process, the new entity will have new growth opportunities," the statement reads.
The recapitalization proposal will require a reorganization of the ownership of the Group's tour operator and airline businesses, which is expected to result in Fosun holding a significant controlling stake in the Group's tour operator and a minority stake in the Group's airlines. The proposal stipulates that a significant portion of the Group's external debt will be converted into equity, to be agreed upon after discussions with financial creditors. The Group's major lending banks support the recapitalization and are engaged in constructive discussions with the Group to agree on the terms.
“The proposed recapitalisation will not impact the Group’s commercial obligations to partners and suppliers,” Thomas Cook emphasises.
The shares of existing shareholders will be significantly diluted as part of the recapitalization. However, shareholders may be given the opportunity to participate in the recapitalization by co-investing with Fosun and converting financial creditors under agreed terms.
"The Group recapitalization process follows the review of the Group's airline development strategy announced in February 2019 and the subsequent proposals to sell the Tour Operator. Since the start of the strategy review, the operating environment in the European travel market has become increasingly challenging. This has impacted the Group's underlying financial position and its ability to manage the Airline or Tour Operator to the satisfaction of its key stakeholders. As a result, the Group Board has concluded that it is in the best interests of all Group stakeholders to fully recapitalize the Group, supported by new investment in the business. Plans to sell the Group Airline are currently on hold pending the outcome of the recapitalization. The recapitalization plan will ultimately replace the planned £300 million debt facility agreed in May 2019," the company explained.
Source: trn-news.ru