Bank demand leaves Thomas Cook exploring options
Thomas Cook is looking at its assets as it attempts to stave off demise, reports tonight say, after lenders demanded significant contingency funding.
Sky News’ Mark Kleinman has been told by insiders that “every possible option” is on the table as they look to salvage some 20,000 jobs.
Kleinman reports the 178-year-old holiday giant has been holding emergency talks about a deal to hive off its Nordic airline and tour operating business units.
The firm needs to find an additional £200m after lending banks – including RBS and Lloyds – demanded contingency funds for the upcoming winter season in which business is flat and cash is low for holiday companies.
Read more: Thomas Cook in stand-off with pension scheme trustees
If it fails to get the extra money underwritten, it could go bust. This would force the Civil Aviation Authority to repatriate British holidaymakers who are currently abroad, which would cost an estimated £600m.
The company is scrambling to wrap up the terms of a restructuring deal with Fosun’s Chinese conglomerate, but fears have also grown that it may not win the support of three-quarters of its bondholders needed for the rescue to go through at a meeting today.
Thomas Cook tonight declined to comment but insiders suggested that the deal to save the firm remained on the table.
Some bondholders have bet against the company’s debt via credit-default swaps – contracts that pay out if the company defaults on its debt.
They are looking for an agreement that ensures they get paid for their positions – and may vote against anything that does not do this.
An RBS spokesperson said: “We don’t recognise this characterisation of events. As one of a number of lenders, RBS, has provided considerable support to Thomas Cook over many years and continues to work with all parties in order to try and find a resolution to the funding and liquidity shortfall at Thomas Cook.”
One stakeholder told the broadcaster that it was “a critical 24 hours” for Thomas Cook’s survival prospects.
In August, Thomas Cook published details of the rescue plan, which will see Fosun pour £900m into the company to help it avoid bankruptcy as it heads into the winter season when holiday bookings are at their nadir.
Read more: Thomas Cook delays crunch bondholder meeting over rescue deal
Thomas Cook reported a £1.5bn half-year loss in May, and is struggling with a £1.4bn debt pile. It has struggled in the face of economic uncertainty over Brexit, rising prices of jet fuel and hotels pushing up their costs in recent years.
The firm also ran into difficulties last summer as a Europe-wide heatwave convinced holidaymakers to stay at home rather than booking a package deal abroad.
Main image: Getty