Popular travel agent Thomas Cook is in talks to avoid a complete collapse which would see some 150,000 holiday makers be returned home by the UK Civil Aviation Authority.
Should the company fail to come up with €226m (£200m) to plug a hole in its finances, the Guardian reports that the company could collapse by the weekend. Talks currently taking place by Thomas Cook executives are exploring the possibility of selling its Nordic airline and tour operating divisions with the hopes that it would plug the aforementioned gap.
Thomas Cook is Britain’s oldest holiday package company, after it was founded in 1841. Should the company collapse by the weekend, it would put some 20,000 jobs at risk, 9,000 of which are in the UK.
On Friday, the company announced it was in negotiations with banks, bondholders and its biggest shareholder for a “seasonal standby facility of £200m, on top of the previously announced £900m injection of new capital”.
“The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery. The company will provide further updates in due course.”
The company’s shares fell 21% to a new low of 3.5p (€0.04). A year ago, the shares were worth 75p (€0.85).
The Royal Bank of Scotland, Barclays and LLoys, the banks behind Thomas Cook, made a last-minute demand for it to raise new funds, the Guardian reports. Chinese company Fosun International, the company’s biggest shareholder, is in talks with Thomas Cook following this latest demand. The Chinese company has already agreed to supply £450 in return for a majority shareholding in Thomas Cook’s tour-operating business as well as its airline.
Calling out the banks, the UK pilot’s union demanded that the Government push the Royal Bank of Scotland and Lloyds to support the company in view of the fact that they both benefitted from a state-bail out during the 2008 financial crisis.