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Thomas Cook in £750m rescue deal talks | Thomas Cook in £750m rescue deal talks |
(about 1 hour later) | |
Troubled travel company Thomas Cook is in £750m rescue talks with banks and 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 buy the firm's tour business. | 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". |
He told the BBC that customers did not need to worry because their holiday bookings were "secure". | |
"They can book with us without worries," he said. "We have enough resources to operate our business so they can enjoy their holidays with us." | |
The cash injection will give the group enough money to trade through to the end of next year and invest for the future. | |
The travel agent 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 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. | 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. |
Mr Fankhauser told the BBC's Today programme that "considering all options we had on the table" the deal was the "best available" choice. | |
Responding to a suggestion that the proposed deal was a last resort, he said: "This is a very good option to secure the business and to put the business on a solid financial foot for the future." | |
Earlier, in a statement issued by Thomas Cook, 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. | |
"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. |
'Intense competition' | |
Fosun said it had "extensive experience" in the global travel industry. | |
"We are committed investors, with a proven track record of turning around iconic brands including ClubMed and Wolverhampton Wanderers FC," it said. | |
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. | 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. | 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. | 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. | Shares in Thomas Cook have plunged by more than 80% over the past 12 months. |