China’s Fosun in talks for $1.28b rescue of Britain’s debt-strapped Thomas Cook

HONG KONG (BLOOMBERG) – Fosun Group is considering taking control of Thomas Cook Group Plc’s tour business in a deal that targets an injection of £750 million (S$1.28 billion) into the London-based company that’s facing pressure from creditors amid a slowdown in sales.

Fosun’s tourism unit, affiliates and Thomas Cook’s lenders are also considering the tour operator’s proposal for recapitalization and separating the tour business from its airline division, Fosun said on Friday (July 12) in a statement. A “significant amount” of Thomas Cook’s external bank and bond debtwould be converted into equity, Fosun said.

Hong Kong-listed Fosun International Ltd already owns about 18 per cent of Thomas Cook, and talks about the takeover plan are at “an advanced stage,” the Chinese company said. A deal would add the tour operator, which had revenue of £7.4 billion last year, to Fosun’s overseas purchases of brands including Club Med resorts and Cirque du Soleil.

The deal under consideration would also leave Fosun with a minority stake in Thomas Cook’s airline business.

Thomas Cook creditors have sought to exit loans on concern the company’s declining performance would weaken its ability to repay. The agency has seen bookings and its bond prices tumble amid concern about slumping travel demand.

In May, S&P Global ratings and Fitch Ratings pushed the company’s credit score deeper into junk territory, citing high indebtedness.

In 2016, Thomas Cook and Fosun set up a travel agency partnership to cater to China’s wealthiest tourists. As the Asian country’s wealth grows, tourist zones around the world have taken steps to draw more of them, especially big-spending luxury travelers.

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