Thomas Cook to be rescued?

Chinese firm considers bailing out struggling group

Thomas Cook plane taking off from Madeira airportThomas Cook has confirmed this morning that is in talks with its largest shareholder and the owner of Club Med, China’s Fosun, over a rescue deal.

The world’s oldest travel company, which has been struggling with a large debt pile and weaker trading, said it was in “advanced discussions” with Fosun, which – together with Thomas Cook’s core lending banks – propose to inject £750m into the firm, allowing it to keep trading over the winter season. The company has been battered by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, which deterred bookings. The proposal would also significantly dilute the value of shares held by other investors.

The 178-year-old London-listed company, worth roughly $4 billion after it debuted in June 2007, currently has a market value of about $255 million and has seen its stock more than halve in value so far this year. The company recently has seemed to blow hot and cold with Madeira as a destination, withdrawing it from its schedules and then reintroducing it.

The deal would give Fosun a large majority of the tour operator business and a large minority stake in its airline, diluting the shareholding of existing investors. EU rules do not allow foreign companies to own more than 49% of an airline. Fosun also bought Wolverhampton Wanderers recently, and if they can turn around Thomas Cook as quickly at they did the football club it would be quite an achievement.

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