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Thomas Cook, the heavily indebted British travel company, seeks Fosun's 750 million pound capital injection and bank creditors as part of an agreement that would give the Chinese conglomerate the majority stake in its main tour operator business .
Fosun explained that and Thomas Cook's major lenders were reviewing the proposal, adding that he would take a "significant" stake in Thomas Cook's airline if the deal was accepted.
The British group proposed to exchange its external debts in bank bonds and bonds in shares, which would lead to a "significant" dilution of badets for the current shareholders of the company, announced the tourism group Fosun, listed in Hong Kong in a statement.
Thomas Cook announced a pre-tax loss of £ 1.5 billion in May, raising concern among guests traveling in the summer from the northern hemisphere to holiday resorts around the world.
Chinese tourists represent one-fifth of global tourism spending. Fosun, which also owns the Club Med travel company, hopes to expand Thomas Cook's business in the Chinese market.
"The discussions between the company, Thomas Cook and Thomas Cook's leading lending banks are advanced on the key business principles of the proposal," said Fosun Tourism Group.
Fosun President Guo Guangchang © Bloomberg
Peter Fankhauser, general manager of Thomas Cook, said that this decision was necessary because of the alarming state of the company's finances, even if it would be "not the result we would like for our shareholders".
The company said the 750 million pounds would be used to provide "sufficient liquidity" to carry out its activities during the northern winter and would give it "the financial flexibility to invest in the activities of the future".
Fosun started as a real estate developer in Shanghai in the 1990s before embarking on pharmaceuticals and consumer goods. It has become a sprawling conglomerate, spending $ 22 billion on acquisitions abroad since 2014, according to Bloomberg data.
His most important purchase in the travel industry was the 2015 acquisition of Club Med for $ 1.1 billion, one of the most prominent Chinese outbound operations to date. In the same year, he acquired a stake in Thomas Cook, which has since grown to 17%.
However, an agreement on the acquisition of Thomas Cook could be subject to stricter scrutiny this year due to growing concerns over the weakening of the Chinese currency due to trade tensions and the slowdown of the national economy . The Beijing government has also taken a less optimistic view of the unusual acquisitions made abroad by private companies in recent years.
Fosun President Guo Guangchang "will still need a lot [foreign currency] Debt support for an agreement that will not do much to excite regulators, "said Brock Silvers, general manager of investment firm Kaiyuan Capital based in Shanghai.
US hedge funds have been preparing earlier this year for a possible restructuring of Thomas Cook's debt, which would leave debt holders in control of the company, according to informed people on the subject.
In 2016, Fosun and Thomas Cook created a Thomas Cook China joint venture, in which Fosun holds a 51% stake. The company focuses on providing package tours outside of China and niche experiences such as trips to sporting events in Europe.
"The ambition is to make Thomas Cook China a major brand in the China travel market. . . reach a size comparable to that of other key source markets in Europe, "Fosun said in a press release.
The company's goal was to add 200,000 Chinese customers by 2018, but failed to meet this target due to a slowdown in Chinese holiday demand in Thailand, said Alessandro, chief executive of the joint venture. Dbadi, to the local media.
Thomas Cook's stock rose 24 percent last month after he said he had discussed with Fosun the sale of his tour operator business. Analysts estimate that the value of the company ranges from 450 to 550 million pounds sterling.
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