Mall of America

Published on Tuesday, July 16, 2019

Thomas Cook rescue plan 'could be blocked'

Thomas Cook's rescue plan could be blocked by its bondholders reluctant to see the value of their shares further diminished.

Citigroup analyst James Ainley - who declared the travel giant 'worthless' in May - said that if the rescue plan goes ahead, the shares would be worth just 3p each.

Currently they are worth just over 5p, having fallen 62% since Thomas Cook announced it was in advanced discussions with its Chinese investor Fosun last Friday.

They are hammering out a deal that will see Fosun, which already owns 18% of Thomas Cook, take a majority stake in the tour operator and a minority stake in its airline operations.

The deal has been welcomed by Thomas Cook pilots, but Citigroup's Ainley said it threatens to dilute its overall stock by about a billion pounds.

Ainley questioned whether bondholders would accept the proposed debt-for-equity swap, given the depleted valuation of the shares they would receive.

He denounced the plan as seemingly 'unrealistic' in a research note, adding that Thomas Cook would probably have to issue fewer new shares than proposed, or persuade investors that it has a strong turnaround plan, but he said there had been little detail from Thomas Cook on its recovery blueprint.

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