Chinese firm considers bailing out struggling group
Thomas 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.