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Thomas Cook in £750m rescue deal talks | Thomas Cook in £750m rescue deal talks |
(about 2 hours 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". | He told the BBC that customers did not need to worry because their holiday bookings were "secure". |
Is my holiday safe? | Is my holiday safe? |
"They can book with us without worries," Mr Fankhauser said. "We have enough resources to operate our business so they can enjoy their holidays with us." | "They can book with us without worries," Mr Fankhauser said. "We have enough resources to operate our business so they can enjoy their holidays with us." |
And this cash injection would give the group enough money to trade through to the end of next year and invest for the future, Thomas Cook said. | And this cash injection would give the group enough money to trade through to the end of next year and invest for the future, Thomas Cook said. |
When store closures and cost-cutting measures were announced at the firm earlier this year, Thomas Cook said holidaymakers could have "complete confidence" because it is an ATOL-protected business. | When store closures and cost-cutting measures were announced at the firm earlier this year, Thomas Cook said holidaymakers could have "complete confidence" because it is an ATOL-protected business. |
Protection under the ATOL - or Air Travel Organiser's Licence - scheme means UK travellers on an air package holidays do not lose their money or become stranded abroad if a travel agent collapses. | Protection under the ATOL - or Air Travel Organiser's Licence - scheme means UK travellers on an air package holidays do not lose their money or become stranded abroad if a travel agent collapses. |
It also covers many charter flights and means that, if the operator collapses while people are away, they can finish their holiday and be flown home at no extra cost. | It also covers many charter flights and means that, if the operator collapses while people are away, they can finish their holiday and be flown home at no extra cost. |
Why does Thomas Cook need the money? | Why does Thomas Cook need the money? |
The travel agent has found it difficult to maintain a presence on the High Street in the face of increased online competition. Last year, it also issued a number of profit warnings blaming a heatwave for a dip in summer holiday bookings. | The travel agent has found it difficult to maintain a presence on the High Street in the face of increased online competition. Last year, it also issued a number of profit warnings blaming a heatwave for a dip in summer holiday bookings. |
It launched a strategic review in February, but since then, dwindling bookings and uncertainty surrounding Brexit have contributed to a deterioration in the market. In March, the firm announced plans to close 21 stores, costing more than 300 jobs, and in May, it revealed a £1.5bn half-year loss. | It launched a strategic review in February, but since then, dwindling bookings and uncertainty surrounding Brexit have contributed to a deterioration in the market. In March, the firm announced plans to close 21 stores, costing more than 300 jobs, and in May, it revealed a £1.5bn half-year loss. |
Thomas Cook 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". | Thomas Cook 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 - which has 9,000 employees in the UK - had already announced plans to slash costs, axing 150 roles from its head office in Peterborough, in the face of tough trading conditions and higher fuel expenses. | |
On Friday, Thomas Cook said the European travel market had become "progressively more challenging" as it painted a bleak picture for the second half of the year, blaming an "uncertain customer environment" for "intense competition". | On Friday, Thomas Cook said the European travel market had become "progressively more challenging" as it painted a bleak picture for the second half of the year, blaming an "uncertain customer environment" for "intense competition". |
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. |
Is it a good deal? | Is it a good deal? |
Mr Fankhauser told the BBC's Today programme that "considering all options we had on the table", the deal was the "best available" choice. | 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." | 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: "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." | Earlier, in a statement issued by Thomas Cook, 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." |
What about shareholders? | What about shareholders? |
Thomas Cook said people who currently hold shares in the firm would see the value of their investment "significantly diluted" as a result of the proposed deal. | Thomas Cook said people who currently hold shares in the firm would see the value of their investment "significantly diluted" as a result of the proposed deal. |
"Basically, it's wipe out time" for shareholders, according to Markets.com analyst Neil Wilson. | "Basically, it's wipe out time" for shareholders, according to Markets.com analyst Neil Wilson. |
But Thomas Cook said existing shareholders may be given the option to reinvest in the firm, alongside Fosun, to become creditors. | But Thomas Cook said existing shareholders may be given the option to reinvest in the firm, alongside Fosun, to become creditors. |
The proposed rescue deal 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 proposed rescue deal 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. |
Shares were trading down by about a third on Friday, at just under 9p apiece. The company's stock price has shed more than 90% of its value in the past year. | Shares were trading down by about a third on Friday, at just under 9p apiece. The company's stock price has shed more than 90% of its value in the past year. |
What is Fosun? | What is Fosun? |
Fosun is a £74.4bn Chinese investment giant that is listed on the Hong Kong stock exchange. The firm already has an 18% stake in Thomas Cook, but if this deal goes ahead, it would gain a "significant majority" of the firm. | Fosun is a £74.4bn Chinese investment giant that is listed on the Hong Kong stock exchange. The firm already has an 18% stake in Thomas Cook, but if this deal goes ahead, it would gain a "significant majority" of the firm. |
Fosun's portfolio of companies runs the gamut from insurers to football clubs. It says it operates in three major segments: "health, happiness and wealth". | Fosun's portfolio of companies runs the gamut from insurers to football clubs. It says it operates in three major segments: "health, happiness and wealth". |
The investor said it had "extensive experience" in the global travel industry. | The investor 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 Club Med and Wolverhampton Wanderers FC," it said. | "We are committed investors, with a proven track record of turning around iconic brands, including Club Med and Wolverhampton Wanderers FC," it said. |