Thomas Cook Group will meet its biggest shareholder and creditors on Sunday morning in a final attempt to piece together a rescue deal before the 178-year-old company collapses into insolvency.Sky News has learnt that a meeting has been scheduled at the offices of the City law firm Slaughter & May in a bid to buy Thomas Cook enough breathing space to stave off administration.
The company needs to secure a £200m lifeline following a demand from its lenders, or face being placed into bankruptcy proceedings in the early hours of Monday morning.
What would happen to UK holidaymakers if Thomas Cook shuts down?
Such a move would trigger Britain’s biggest-ever peacetime repatriation operation, involving approximately 165,000 holidaymakers who will need to be flown back to the UK.The Civil Aviation Authority is leading the exercise, which has been code-named Project Matterhorn.
A source close to the situation said the meeting at Slaughter & May was aimed at finding a way to salvage the rescue deal being led by Fosun Tourism Group, the owner of Club Med, which has pledged to provide half of a £900m financing package to keep Thomas Cook afloat.In recent days, the London-listed company has explored a multitude of options to raise the remaining £200m required by its banking syndicate.
More from Thomas Cook
Many of those have been discounted because there is insufficient time to implement them before Thomas Cook runs out of money.A plan for Triton Partners to buy Thomas Cook’s Nordic operations was still under discussion on Saturday, as was a proposal to keep its airlines in the UK, Germany and northern Europe out of administration while letting its British tour operating arm fail.However, one insider suggested that neither was likely to be viable.A separate discussion between the company and CQS Management, the hedge fund, to provide a chunk of the £200m additional funding has also been aborted in the last fortnight.
There remained, however, a glimmer of hope that the government’s likely refusal to provide direct funding to keep Thomas Cook afloat could yet prompt creditors to find a solution of their own.Thomas Cook’s syndicate of more than a dozen bank lenders has been criticised by unnamed sources for demanding the additional £200m of standby funding to see the company through tough winter trading – a demand revealed by Sky News last week.People close to the situation have said, though, that blaming Royal Bank of Scotland, one of the biggest lenders to Thomas Cook, was “a ludicrous position” given the travel group’s frequent revision of its future financing needs during the last six months.A request for emergency government funding was made by Thomas Cook earlier this week, with executives arguing that the cost to taxpayers would be dwarfed by the bill incurred by the repatriation.One insider described the widely reported £600m tab, however, as being “a gross overestimate of the cost to taxpayers”.
The travel company is entering final talks for a rescue package
Sky News revealed on Thursday that Thomas Cook, which was founded in 1841, was expected to crash into administration as soon as Sunday night unless the missing £200m funding gap could be filled.More than 20,000 jobs across the group are at risk if it collapses, with 9000 of those jobs in the UK.Several hundred thousand people from other European countries are also current customers of Thomas Cook at scores of vacation destinations.Thomas Cook had already warned that it could face collapse unless it finalises a rescue deal this month, saying in a court filing last week that it “would be likely to run out of money and enter into formal insolvency proceedings” if it did not.Some 11 million customers will have travelled with Thomas Cook by the end of the crucial summer season.Efforts to secure its rescue have, though, been hampered by weak trading and the competing demands of financial stakeholders including its pension trustees and the holders of insurance against default on its debts.
Thomas Cook has been targeting the injection of new money from the recapitalisation by early October in order to pay hoteliers and other key suppliers.In order to survive, it would also need to persuade the CAA, which administers the ATOL scheme covering travel companies, that it should renew its licence at the end of September for another 12 months.Current trading at Thomas Cook is understood to have remained difficult for months, with the ongoing political crisis in Westminster contributing to soft consumer demand for autumn and winter bookings.On Friday shares in Thomas Cook closed at 3.45p, more than 95% lower than at the same point last year.The British company was founded in 1841 by a 32-year-old cabinet-maker and former Baptist preacher who began offering one-day rail excursions from Leicester to Loughborough for a shilling.From there, it went on to become one of the world’s largest holiday companies, marking its 175th anniversary three years ago.Thomas Cook declined to comment on Saturday night.
Let’s block ads! (Why?)