Thomas Cook in £750-million rescue talks
British travel company Thomas Cook, which has been struggling financially for some time, is reportedly in rescue deal talks with Chinese investor Fosun, its biggest shareholder. The deal, purported to be worth £750 million, would see Fosun – which also owns holiday resort chain Club Med and UK football team Wolverhampton Wanderers – obtain a majority stake in the nearly 200-year-old travel business, as well as a minority holding in Thomas Cook Airlines. Discussions are said to be at an ‘advanced’ stage.
Thomas Cook has been struggling since 2011, when its value plunged, and it became saddled with hundreds of millions of pounds of debt. Other subsequent factors such as the boom in agile online competitors, uncertainty around Brexit and last year’s unprecedented heatwave have strangled recovery efforts; the new deal will make a significant dent in the company’s debt, with some lenders reportedly agreeing to forfeit what they are owed in exchange for shares.
“Today’s announcement is really about a plan that ensures the business to continue to trade and operate as normal, and the deal preserves our brand,” commented Thomas Cook’s Chief Executive Peter Fankhauser. “So that is principally really good news for our employees.”
Customers who have already made bookings with Thomas Cook have been assured that their holidays will not be impacted.
While Thomas Cook’s travails have been well publicised, it still remains a shock to see a legacy operator with such an iconic brand pushing for an unprecedented debt-for-equity deal like the one currently being negotiated. It is of course good news that customers will not suffer – but it remains to be seen whether loyal employees will lose their positions.
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