The travel and tourism firm Thomas Cook has said that currently it is focusing on completing a rescue deal even as reports are emerging that the terms of the deal could be voted against by some lenders and investors.
According to reports, last stage negotiation with bondholders is being held by the troubled travel firm to complete its proposed acquisition by Chinese firm Fosun Tourism. Three quarters of the bondholders of the company need to give a nod in the affirmative for the deal to be completed.
According to a report published by the Financial Times, a meeting with the bondholders of the company is being sought to be delayed by Thomas Cook so that there is enough time to negotiate and convince them.
“We announced on 28 August that we have reached substantial agreement with Fosun and our creditors regarding key commercial terms of the recapitalisation of Thomas Cook. We remain focused on completing the transaction,” the travel firm said in a statement.
No comment on the deal and on Thomas Cook was made by the United Kingdom’s aviation watchdog, the Civil Aviation Authority (CAA). “We are in regular contact with all large ATOL holders and constantly monitor company performance. We do not comment on the financial situation of the individual businesses we regulate,” it said in a statement.
Chinese company Fosun is the largest shareholder of Thomas Cook and the announcement that the Chinese company had approached for acquiring the tour business of the company was first announced by Thomas and Cook in June. The terms and conditions of the acquisition had been finalized with Fosun and a majority of its bondholders, Thomas Cook had said last month.
In recent times, Thomas Cook has been facing financial problems. A loss of £1.5bn for the first half of the year was reported by the company in May this year. Apart from not managing to reduce its debt pile, the company has laos issued three profit warnings in the last one year.
The company cited a number of geopolitical reasons for its profit warnings which included the political instability in popular holiday destinations such as Turkey, the prolonged heatwave that hit Europe last summer and the delaying of vacation plans by British customers because of Brexit. Increasing competition from online travel agents and low-cost airlines have also dented the profits of the company.
Thomas Cook is an ATOL-protected business. Customer protection under this scheme – which is known as Air Travel Organiser’s Licence is applicable to UK travelers on air package holidays and ensures that they do not lose their money or become stranded abroad in the case of the collapse of a travel agent. This scheme also includes many charter flights which means that holiday makers would be able to finish their holiday and be flown home at no extra cost in the eventuality of the failure of the operator while they are away holidaying. Further, travelers are also provides a replacement holiday of equal value, or a refund in the eventuality of the business collapsing before they go away.
(Adapted from BBC.com)