Thomas Cook on the verge, six lakh travelers in danger

Britain's Thomas Cook urgently needs 200 million pounds ($ 251 million) to satisfy his lenders, otherwise one of the world's oldest holiday agencies could collapse in the coming days, potentially leaving hundreds of thousands of vacationers stranded.

The UK-based company agreed last month on a £ 900 million recapitalization plan with Chinese shareholder Fosun and the travel agency's banks, which has significantly diluted existing shareholders. Thomas Cook has no connection with Thomas Cook India, acquired by the Canadian group Fairfax in 2012.

The firm issued a statement on Friday saying that a request for additional funding at the last minute would put the transaction at risk. The company has 1.7 billion pounds of debt. Thomas Cook employs 21,000 people and currently has 600,000 holiday guests, mainly German, British and Scandinavian.

A source familiar with the negotiations said the company had "a few days" to find a solution. The company's shares hit a record low of 2p after the statement, down 15% on the day.

Lenders require £ 200 million of additional subscribed funds to support Thomas Cook during the winter period of his transactions, when cash is generally low. "Discussions to agree on the final terms for the recapitalization and reorganization of the company are continuing," said Thomas Cook. "These talks include a recent request for a seasonal reserve facility of £ 200 million, in addition to the previously announced new capital injection of £ 900 million".

Thomas Cook said the recapitalization poses "significant risk of non-recovery" for diluted shareholders. The company had to face stiff competition in popular destinations, at a high debt level and an exceptionally hot summer in 2018, which reduced last-minute bookings.

The latest Credit Default Swap (CDS) prices indicate an implied default probability of 100% for Thomas Cook, as indicated by Markit's IHS data, and a decision as to whether investors who were using the credit default method were in the same position. instrument to bet against the company are due is delayed until at least until Monday. A source close to the talks said Thursday that the Royal Bank of Scotland (RBS) hit Thomas Cook with a last minute request for additional funding, adding that the situation "is becoming increasingly critical". A spokesman for RBS said the bank was "not recognizing this characterization of events" and was working with all parties to "try to find a solution to the funding and liquidity gap at Thomas Cook".

Under the initial terms of the plan, Fosun – whose Chinese parent company has an all-inclusive vacation company Club Med – provide £ 450 million ($ 552 million) in new money for at least 75% of the tour operator business and 25% of the group's airline.

"Our proposed contribution of £ 450 million has not changed throughout this process," said a spokesman for the Fosun Tourism Group.

"As a minority investor in Thomas Cook Groupand, in the absence of board representation, we continue to work tirelessly with a wide range of other stakeholders and stakeholders to reach an agreement on the company's proposed recapitalization plan.

Thomas Cook's credit banks and bondholders were to accumulate an additional £ 450 million under the plan and convert their existing debt into equity, giving them a total of around 75% of the airline and up to 25% in the tour operator sector, says the group. If this deal is not finalized before the vote of creditors on Sept. 27, holidaymakers could be facing the second major collapse of a tour operator in as many years after Monarch's bankruptcy in 2017.

A spokesman for the Ministry of Transport refused to say if there were any repatriation projects. Asked about Thomas Cook, he said: "We do not speculate on the financial situation of individual companies."