Thomas Cook has agreed “substantial” terms on a proposed £900 million rescue deal, headed up by its largest shareholder, which will recapitalise and restructure the historic operator.
Chinese travel giant Fosun will stump up £450 million to acquire “at least” 75% of the group tour operator and 25% of Cook’s group airline.
Cook’s core lending banks and noteholders will aim to match Fosun’s investment, converting existing debt into around 75% equity in the group airline and 25% in the tour operator.
The proposal is set to be implement in early October. It remains subject to legal agreements, credit, investment and anti-trust approvals, performance conditions, due diligence, “risk allocation”, terms over the separation of the tour operator and airline and licence renewals.
There will be no impact on trade creditors or customers, Cook has said.
While the deal will “significantly dilute” the investments made by existing shareholders, Cook reiterated shareholders may yet have the opportunity to participate in the recapitalisation plan alongside Fosun.
“The board continues to proceed on the basis recapitalisation, achieved with the support of shareholders, is the preferred means of securing the future of the group for all stakeholders – including customers, suppliers and employees – while at the same time enabling existing shareholders to continue to retain an investment in the company,” said Cook on Wednesday (August 28).
While the board intends to retain the company’s stock market listing, Cook has said certain circumstances could lead to this being cancelled.
The new agreement will supersede Cook’s £300 million credit facility announced in May, which will be allowed to lapse.
Cook initially came to terms with Fosun over a £750 million bailout, but this later rose to £900 million after Cook sought additional cash headroom ahead of the winter.