Struggling travel group Thomas Cook has secured what it is calling a “substantial agreement” regarding key commercial terms with investors and creditors as it seeks to stave off bankruptcy.
However, final terms remain to be agreed.
After intensive negotiations, Fosun Tourism Group has agreed to contribute £450 million of new money to the group.
In exchange, the Chinese conglomerate will acquire at least 75 per cent of the group’s tour operator, subject to the receipt of anti-trust approvals.
Some 25 per cent of the Thomas Cook airline will also be taken over by the Chinese Club Med owner.
At the same time, Thomas Cook’s banks are targeting an aggregate investment of £450 million in new money.
Existing bank debt will be converted into ownership of three quarters of the airline and the remaining quarter of the tour operator.
It is hoped the deal can be completed in early October.
Thomas Cook incurred a pre-tax loss of almost £1.5 billion for the winter half year period to March 31st.
Thomas Cook Group’s shares are listed on the London Stock Exchange, but have fallen from 130 pence per share a little over a year ago to six pence today.
The company said the current intention of the board is to maintain this listing.
However, the implementation of the proposed recapitalisation may, in certain circumstances, result in the cancellation of the listing, Thomas Cook warned.
The group wanted the new transaction “remains subject to a legally-binding agreement being reached among the parties to the recapitalisation plan and, where appropriate, the group’s other key stakeholders”.
The proposed recapitalisation plan does not impact trade creditors or customers, the company added.
Thomas Cook is one of the largest leisure travel organisations in the world, with sales of £9.6 billion in the year ended September 30th.
It has 21,000 employees and 200 own-brand hotels.
It operates from 16 source markets and serves over 22 million customers annually.