Thomas Cook in rescue talks with Chinese investors
A logo of Thomas Cook is seen in central London, Britain, 26 November 2014. EPA-EFE/FILE/FACUNDO ARRIZABALAGA
London, Jul 12 (efe-epa).- Travel firm Thomas Cook is in advanced talks with its main shareholder, Chinese company Fosun Travel Group, in a bid to secure a cash injection of 750 million pounds ($940m) to save the struggling enterprise.
In a statement Friday, Thomas Cook Group said the new money would provide it with enough liquidity to continue its business throughout the 2019/20 winter season and would allow it to invest in the future.
The company's chief executive, Peter Fankhauser, said: "After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing, the Board has decided to move forward with a plan to recapitalize the business, supported by a substantial injection of new money from our long-standing shareholder, Fosun, and our core lending banks.
"While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees."
Thomas Cook's share prices have plunged in recent weeks as it struggles to stay afloat just as peak holiday sales take off for the summer period.
If the deal comes into effect, Fosun Travel would become a majority shareholder in the Thomas Cook's Tour Operator and a significant minority interest in the Group Airline.
"Existing shareholders will be significantly diluted as part of the recapitalization. However, shareholders may be given the opportunity to participate in the recapitalization by way of investment alongside Fosun and converting financial creditors on terms to be agreed," the statement said.
Thomas Cook said that trends in the first half of the year had carried over into the second half, reflecting consumer uncertainty in the United Kingdom.
It said that its third-quarter trading update for July 18 had been canceled pending a review.
Once synonymous with high street package holidays in the UK, Thomas Cook has fallen behind amid high online competition.
On March 22, the company announces the closure of 21 stores across the UK, which would cost around 300 jobs.
Fankhauser revealed in May that the company had lost 1.4 billion pounds in the first six months of the year.
"The prolonged heatwave last summer and high prices in the Canaries reduced customer demand for winter sun, particularly in the Nordic region, while there is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for this summer," he said. EFE-EPA