Thomas Cook needs £200m to keep doors open
Lenders demand more funds to maintain support after recapitalisation deal with Chinese shareholder Fosun
Britain’s Thomas Cook said its banks had ordered the company to find an additional £200m of funding to guarantee the survival of the world’s oldest holiday company.
Thomas Cook agreed the main terms of a £900m recapitalisation plan in a deal with Chinese shareholder Fosun in August, but on Thursday a source said that lenders were demanding another £200m in underwritten funds to maintain their support.
“Discussions to agree final terms on the recapitalisation and reorganisation of the company are continuing between the company and a range of stakeholders,” it said in a statement.
“These discussions include a recent request for a seasonal standby facility of £200m, on top of the previously announced £900m injection of new capital.”
A source close to the discussions said on Thursday that Royal Bank of Scotland (RBS) had hit Thomas Cook with a last minute demand for the extra funding, adding that the situation “was becoming more critical”.
A spokesperson for RBS said the bank did not “recognise this characterisation of events” and was working with all parties to “try to find a resolution to the funding and liquidity shortfall at Thomas Cook.”
Under the original terms of the plan, Fosun — whose Chinese parent owns all-inclusive holiday firm Club Med — would contribute £450m of new money in return for at least 75% of the tour operator business and 25% of the group’s airline.
Thomas Cook’s lending banks and bondholders were to stump up a further £450m and convert their existing debt to equity, giving them in total about 75% of the airline and up to 25% in the tour operator business, the group said.
“The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery,” Thomas Cook said on Friday.
“The company will provide further updates in due course.”