Leisure firm Thomas Cook Group is continuing discussions on a recapitalisation and restructuring including a £200 million ($250 million) standby fund on top of its previous capital injection.
Thomas Cook had already reached a provisional agreement covering the “key commercial terms” of a £900 million capital injection involving Chinese tourism group Fosun.
This agreement included a £450 million contribution from Fosun which would acquire at least 75% of Thomas Cook’s tour operator and 25% of its airline operation.
Another £450 million would come from primary banks and lenders to the company, which would also convert debt into equity – covering 75% of the airline and 25% of the tour operator.
Thomas Cook says the parties aimed to implement the financial plan by early October.
But the plan is still being finalised, and has yet to result in a legally-binding pact, and Thomas Cook says it has been expanded to include a £200 million “seasonal standby” facility, which comes “on top” of the £900 million capital injection.
The discussions involve not only Fosun and core lending banks but a “majority” of 2022-23 bondholders in Thomas Cook.
Thomas Cook says the talks to agree final terms are “continuing”, adding: “The recapitalisation is expected to result in existing shareholders' interests being significantly diluted, with significant risk of no recovery.”
It had been seeking creditor consent for the proposed agreement, warning that it remained subject to various considerations including the group’s performance conditions, due diligence, and risk allocation.
Thomas Cook also pointed out that it could conceivably end up de-listing under certain circumstances.
It revealed plans to recapitalise in July after turning in a pre-tax loss of £1.45 billion for the half-year to 31 March, far deeper than the previous £303 million.
Thomas Cook has already embarked on a strategic review of its airline operation, but any notion of disposing of the airline division was undermined by the challenging conditions in the European travel market.