Mall of America

Published on Monday, September 16, 2019

Thomas Cook pushes back crucial takeover vote

Thomas Cook has postponed this week's scheduled creditors' vote on its planned takeover by Fosun until later this month.

A court application to delay the vote over the terms of a £900m rescue funding injection - which could yet rise to £1.1bn - was granted late on Monday afternoon.

The ruling gives Thomas Cook more time to try to get its rescue package agreed.

The company issued a statement saying: "As part of the process to finalise the full commercial terms between Thomas Cook Group's creditors and stakeholders, the Scheme Meetings and the Schemes Sanction Hearing relating to Thomas Cook Group's proposed recapitalisation will take place on the 27 and 30 September respectively.

"The Company continues to target implementation of the recapitalisation in early October."

Thomas Cook needs to secure support from three quarters of its bondholders for the deal to be approved, but, according to reports first circulated in the FT, some hedge funds are set to vote against the recapitalisation, which would result in existing shareholders' interests being significantly diluted.

The disgruntled bondholders are pushing for the deal to be restructured to allow credit default swaps (CDS) on their loans, which act as an insurance that pays out if the bonds become worthless.

How has this affected the share price?
The website Sharecast reported Thomas Cook shares were down 11.2% at 4.47p, on Monday, following reports the Civil Aviation Authority is on alert over the possible repatriation of passengers should the business collapse. Shares recovered slightly on news of the delay.

The CAA has not commented.

What's the timescale?
Last week, Thomas Cook warned the deal needed to be finalised quickly. The company's ATOL needs to be renewed by October 1 and it needs to pay key suppliers.

What do analysts say?
Steve Miley, senior market analyst at said that, even if a deal is secured, Thomas Cook will 'still have to convince the CAA of its solvency in order to renew its ATOL licence by the end of September'.

Miley said: "The deal that is viewed as destroying wealth for current shareholders might provide a gasp of air for the struggling company, but it remains to see how the cash infusion would be used to turnaround a giant in a changing tourism industry."

He added: "The cash infusion would only be seen as a short-term fix, whereas Thomas Cook needs a longer-term strategy and solution in a structurally shifting market."



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