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Published on Wednesday, August 28, 2019

Thomas Cook agrees rescue deal

Thomas Cook has confirmed the key terms of a rescue deal with Chinese investor Fosun, its banks and major bondholders.

The company will sell the majority of its tour operation and a stake in its airline to Fosun, which is currently its major shareholder.

The agreement, expected to be concluded on October 1, sees Fosun take control of the business, by injecting £450 million, in exchange for at least 75% of equity in Thomas Cook's tour op and up to 25% in the airline.

Core lending banks and bondholders will put in the same amount of money for the opposite parts of the business: contributing a further £450m for 75% of the airline and up to 25% of the tour operator business

But the plan, which is subject to approvals and conditions, will result in a significant dilution in existing shareholders' interests, Thomas Cook said. It added it had decided the rescue deal was the best way to secure the future of the group for all its stakeholders.

In a statement, Thomas Cook said:  "In its announcement of 12 July 2019, Thomas Cook stated that shareholders may be given the opportunity to participate in the recapitalisation by way of investment alongside Fosun and converting senior creditors on terms to be agreed.

"The Board continues to proceed on the basis that a recapitalisation, achieved with the support of shareholders, is the preferred means of securing the future of the Group for all its stakeholders (including customers, suppliers and employees), while at the same time enabling the existing shareholders to continue to retain an investment in the Company.

"However, the recapitalisation is expected to result in existing shareholders' interests in the recapitalised and reorganised Group Airline being significantly diluted, subject to feedback from creditors, the new money providers and other stakeholders."

Fosun, which also owns Club Med had been in talks with Thomas Cook since July.

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