Thomas Cook in advanced talks over extra £150m funding for rescue deal
Troubled travel company Thomas Cook is in advanced talks to raise £150 million from bondholders after making “progress” over the terms of a rescue deal.
The tour operator is looking to secure the cash injection on top of a £750 million deal it has already agreed with Chinese firm Fosun to attempt to secure the future of the company.
Thomas Cook has suffered recently as a result of mounting debts, reporting a £1.2 billion net debt in its half-year results in May.
It has also been hit hard by an influx of online competitors which has resulted in oversupply, forcing tour operators to cut prices.
Last month, Thomas Cook announced that majority shareholder Fosun would recapitalise the company, with additional funding from its lending banks.
The travel firm said the additional cash boost would ensure further liquidity headroom for the difficult winter period.
In a statement to investors, the company said: “The discussions with noteholders include the injection of additional capital on top of the previously announced £750 million.
“This additional capital, of approximately £150 million, will provide further liquidity headroom through the coming 2019-20 winter cash low-period and ensure the business can continue to invest in its strategy.”
Thomas Cook said its original £750 million funding deal – which included £450 million from Fosun, with the rest from lenders – would give the company sufficient liquidity to cover its costs for the rest of the year.
In the aftermath of the funding deal, Thomas Cook’s shares slumped further, amid fears that shareholders would be all but wiped out by the refinancing.
Thomas Cook is expected to split in two as part of the deal, with Fosun likely to take a majority stake in the tour operator business and a minority stake in Thomas Cook’s airline business.
The travel firm started a sale process for its airline arm earlier this year, as it looks to secure further funds.