Thomas Cook issued a statement this morning confirming that its lenders will only approve its £900 million rescue plan if it can find an additional £200 million loan facility to see it through the winter.
The tour operator said it is continuing discussions with a range of stakeholders, including its largest shareholder, Chinese investor Fosun, its core lending banks and the majority of its 2022 and 2023 senior noteholders.
"These discussions include a recent request for a seasonal standby facility of £200 million, on top of the previously announced £900 million injection of new capital," it said.
Half of the £900 million would come from Fosun, in exchange for 75% of the tour operator and 25% of Thomas Cook Airlines, and the remainder would come from Thomas Cook's existing lenders, who would take control of the airline and 25% of the tour operator.
"The recapitalisation is expected to result in existing shareholders' interests being significantly diluted, with significant risk of no recovery," said Thomas Cook in its statement.
It did not say where it could potentially raise the additional £200 million loan that it needs to satisfy the lenders.
The deal could also be blocked by those funds holding Credit Default Swaps - insurance against Thomas Cook's collapse - which will lose any chance of a payout if the refinancing package goes ahead. A crunch meeting to decide whether these funds could get their cash now, ahead of the refinancing, has been postponed until Monday.
Thomas Cook issued the statement this morning following days of intense speculation about the stability of one of Britain's oldest travel companies.
However, the statement has led to further scare stories in national newspapers this morning about the 178-year-old operator's potential demise.
Some newspapers are claiming that the tour operator has only until Sunday to find the additional £200 million. If it doesn't, it has a legal obligation to declare itself insolvent and call in administrators. This has not been confirmed by Thomas Cook.
In an article in the Daily Mail, it claimed the Civil Aviation Authority is working with the government on contingency plans to repatriate up to 180,000 Thomas Cook customers if the company goes bust in the next few days. Known as Operation Matterhorn, the plan would presumably protect flight-only customers who aren't covered by the airline's ATOL.
The CAA has refused to comment on Thomas Cook's situation, saying only that it monitors the financial situation of all ATOL holders, adding: "We have lots of contingency plans in place to cover all sorts of situations with lots of businesses that we regulate."
When TravelMole asked the Department for Transport about the existence of Operation Matterhorn, its spokeswoman said: "We do not speculate on the financial situation of individual businesses."
Thomas Cook is due to renew its ATOL at the end of this month, but must first satisfy the CAA of its financial stability.
With all the speculation, is it safe to book with Thomas Cook?
Amidst all the concern, a short TravelMole poll suggests a small majority of travel agents are continuing to book Thomas Cook flights and packages, despite fears the company might collapse. One large independent travel agent told us: "We're still booking Thomas Cook flights because they're the best option and if they don't go ahead, we'll just have to deal with it."
What the Mole says:
As of today, there can be few holidaymakers who aren't aware that there is a risk that Thomas Cook might not survive. Some of the stories in today's papers have created the impression that tens of thousands of customers will be left stranded if the company goes under in the next few days, leaving travel agents who want to continue to support Thomas Cook (and indeed its own staff) with a very, very diffcult task.
What the staff think:
The pilots' union BALPA, which has members amongst Thomas Cook Airlines' staff, called on the goverment to step in and force the banks to support Thomas Cook.
In a statment, BALPA said: "With a £900m financial restructuring package involving the Chinese company Fosun, Thomas Cook looked to have secured its future when at the last minute its banks, including RBS and Lloyd's, demanded an additional £200m liquidity. These same banks were bailed out by the taxpayer to the tune of £65 billion and RBS is majority owned by the state."
BALPA pokesman Brian Strutton added "It is appalling that banks that owe their very existence to handouts from the British taxpayer, show no allegiance to a great British company, Thomas Cook, when it needs help. This puts 9,000 good quality UK jobs needlessly at risk and puts an iconic British brand in jeopardy.
"The government has a say in this, owning one of the key banks and still with huge influence over the other. RBS and Lloyd's should be told by the Prime Minister to support Thomas Cook. If Thomas Cook goes into administration it will cost the taxpayer as much to repatriate holidaymakers as it would cost to save Thomas Cook; the Government sat on the sidelines wringing its hands when Monarch Airlines was let down by its financiers, this time Government needs to get a grip and do its bit to save Thomas Cook."
With permission from Travelmole
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