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Thomas Cook in rescue deal talks with China's Fosun Thomas Cook in £750m rescue deal talks
(32 minutes later)
Troubled travel company Thomas Cook is in rescue talks with its largest shareholder, Fosun. Troubled travel company Thomas Cook is in £750m rescue talks with banks and its largest shareholder, Fosun.
The measures, which have not been finalised, would see the Chinese investor inject £750m into the firm. The measures, which have not been finalised, would see the Chinese investor buy the firm's tour business.
Thomas Cook's chief executive, Peter Fankhauser, said the proposal was "not the outcome any of us wanted" but insisted it was "pragmatic".Thomas Cook's chief executive, Peter Fankhauser, said the proposal was "not the outcome any of us wanted" but insisted it was "pragmatic".
The cash injection will give the group enough money to trade through to the end of next year and invest.The cash injection will give the group enough money to trade through to the end of next year and invest.
The tour operator launched a strategic review earlier this year but since then, it said, the European travel market has become "progressively more challenging". The travel agent launched a strategic review earlier this year but since then, it said, the European travel market has become "progressively more challenging".
That has hit the firm's finances and made it difficult to sell its airline or tour business to generate some cash.That has hit the firm's finances and made it difficult to sell its airline or tour business to generate some cash.
As a result, the group has been forced to enter into talks with Fosun, which will own a significant majority of the travel company's tour operator and a large minority stake in its airline if the deal goes ahead. As a result, the group has been forced to enter into talks with its banks and Fosun, which will own a significant majority of the travel company's tour operator and a large minority stake in its airline if the deal goes ahead.
'Responsible solution''Responsible solution'
"After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing, the board has decided to move forward with a plan to recapitalise the business, supported by a substantial injection of new money from our long-standing shareholder, Fosun, and our core lending banks," Mr Fankhauser said."After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing, the board has decided to move forward with a plan to recapitalise the business, supported by a substantial injection of new money from our long-standing shareholder, Fosun, and our core lending banks," Mr Fankhauser said.
"While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees.""While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees."
People who currently hold shares in the firm would see the value of their investment "significantly diluted" as a result of the proposed deal.People who currently hold shares in the firm would see the value of their investment "significantly diluted" as a result of the proposed deal.
The plans may even indicate a potential retreat from the stock market for Thomas Cook in a move that would see the world's oldest package holiday firm become a private company.The plans may even indicate a potential retreat from the stock market for Thomas Cook in a move that would see the world's oldest package holiday firm become a private company.
Thomas Cook said it was facing "intense competition" going into the second half of the year, blaming an "uncertain customer environment".Thomas Cook said it was facing "intense competition" going into the second half of the year, blaming an "uncertain customer environment".
The firm said it was trying to combat those challenges with a "rigorous focus on cost" and by "delivering a stronger holiday offering to customers through high quality, higher-margin hotels".The firm said it was trying to combat those challenges with a "rigorous focus on cost" and by "delivering a stronger holiday offering to customers through high quality, higher-margin hotels".
The travel firm had already announced plans to slash costs, axing 150 roles from its head office in Peterborough, in the face of tough trading and higher fuel expenses.
Thomas Cook has been grappling with a decline in bookings and uncertainty surrounding Brexit, which it said contributed to the £1.5bn half-year loss that it reported in May.
At the time, the firm hinted that it might close more stores, having already announced plans in March to shut 21 outlets and cut 320 retail jobs.
Shares in Thomas Cook have plunged by more than 80% over the past 12 months.