China's Fosun in talks to invest United States dollars 940 million in Thomas Cook

China's Fosun to invest £750m in debt-ridden Thomas Cook

China's Fosun to invest £750m in debt-ridden Thomas Cook

On Friday, Thomas Cook stunned the market when it unveiled a debt-for-equity swap deal that would see conglomerate Fosun and its lending banks inject £750 million into the business to stave off a collapse.

Fosun International, which is listed in the Hong Kong stock exchange, also released a statement about the deal stating: "We are committed investors, with a proven track record of turning around iconic brands including Club Med and Wolverhampton Wanderers FC".

In a separate trading update, Thomas Cook said is summer 2019 programme was 75% sold, slightly ahead of the same period previous year.

But if the proposal is agreed it will mean a shake-up of the company's ownership with Fosun expected to take a controlling stake in the tour operating business and a significant minority interest in the group's airline.

The Shanghai-based Fosun Group conglomerate has been on a buying spree in the past few years, and taking control of Thomas Cook would significantly expand its business in Europe.

Fosun did not say how much of the money it would inject and how much would come from lenders.

It follows recent reports that Fosun was eyeing up a deal which could lead to the complete break-up of the British travel firm, which is the world's oldest package holiday company.

Ultimately, Thomas Cook is in the position it is because its business model has not majorly evolved since it first began as a typical all-inclusive package holiday tour operator. As a modern worldwide investment company, Fosun may encourage Thomas Cook to enhance booking online, causing even more job cuts and future store closures.

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'While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees, ' Fankhauser added.

The group had total debt of about 1.9 billion pounds as of March 31, according to data compiled by Bloomberg, and its shares have tumbled 87 percent over the past 12 months.

Shares in Thomas Cook were trading down 46 per cent at 7.1 pence today, valuing its equity at £109 million (RM562 million).

A deal would add the tour operator, which had revenue of £7.4 billion past year, to Fosun's overseas purchases of brands, including Club Med resorts and Cirque du Soleil. Its higher-margin airline business - which includes German holiday carrier Condor - had revenue of £3.5 billion.

"Thomas Cook's largest shareholder Fosun is in advanced talks with management over a deal that would effectively hand over the company to the Chinese firm".

This would mark one of the most significant purchases of a British company by a Chinese group in years.

The proposal is subject to due diligence and further discussion, among other things, Fosun said.

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