Thomas Cook rescue deal on knife edge as bondholders hire advisers for a face off
Thomas Cook’s £750 million rescue deal with Chinese group Fosun is hanging in the balance after bondholders hired heavyweight advisers to face off with the company.
Sources said bondholders had appointed advisers from US investment bank Houlihan Lokey, lawyers from Milbank and set up a committee ahead of crunch negotiations with the 178-year-old travel firm and its lending banks.
On Friday, Thomas Cook stunned the market when it unveiled a debt-for-equity swap deal that would see conglomerate Fosun and its lending banks inject £750 million into the business to stave off a collapse.
Thomas Cook stunned the market when it unveiled a debt-for-equity swap deal that would see conglomerate Chinese group Fosun and its lending banks inject £750 million into the business
The group has been struggling with a £1.9 billion debt pile.
The shares fell 7.8p – almost 60 per cent – to 5.38p after the announcement as it became clear that investors would be left with little or no equity.
Fosun, which owns a fifth of the shares, wants control of Thomas Cook’s tour operating business.
Under the deal, it would become the majority owner and receive a small stake in the firm’s airline.
Thomas Cook said its bank lenders were ‘supportive of the recapitalisation’, but said it had to reach agreement with other stakeholders, such as the bondholders.
One debt investor said the fact that bonds didn’t plunge on Friday implied those investors might be willing to approve the deal and become shareholders alongside Fosun and the lending banks.
Thomas Cook declined to comment.