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RNS Number : 3094F
Thomas Cook Group PLC
12 July 2019
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014
Proposed recapitalisation of Thomas Cook Group
12 July 2019 - Thomas Cook Group (the "Group") announces that it
is in advanced discussions with the Group's largest shareholder,
Fosun Tourism Group and its affiliates ("Fosun"), and Thomas Cook's
core lending banks on the key commercial principles on which they
would make a substantial new capital investment as part of a
proposed recapitalisation and separation of the Group.
Under the proposal, the Group is targeting an injection of
GBP750 million of new money which would provide sufficient
liquidity to trade over the Winter 2019/20 season and the financial
flexibility to invest in the business for the future. At
completion, the new money would comprise a capital injection and
new financing facilities.
The recapitalisation proposal will require a reorganisation of
the ownership of the Tour Operator and Airline businesses which is
expected to result in Fosun owning a significant controlling stake
in the Group Tour Operator and a significant minority interest in
the Group Airline. The proposal envisages that a significant amount
of the Group's external bank and bond debt will be converted into
equity, to be agreed following discussions with financial
creditors. The Group's core lending banks are supportive of a
recapitalisation and are engaged in constructive discussions with
the Group to agree terms. The proposed recapitalisation will not
impact trade creditors.
Existing shareholders will be significantly diluted as part of
the recapitalisation. However, shareholders may be given the
opportunity to participate in the recapitalisation by way of
investment alongside Fosun and converting financial creditors on
terms to be agreed.
This announcement results from the strategic review of the Group
Airline announced in February 2019, and subsequent approaches for
the Tour Operator. Since commencing the review, the operating
environment in the European travel market has become progressively
more challenging. This has impacted the Group's underlying
financial position and its ability to execute a disposal of the
Airline or the Tour Operator, either in whole or parts, in a way
which returns satisfactory value to the Group and its
stakeholders.
As a result, the Board has concluded that it is in the best
interests of all the Group's stakeholders to pursue a full
recapitalisation of the Group supported by new investment into the
business. The strategic review of the Group Airline is paused,
pending the outcome of the recapitalisation. The recapitalisation
plan would ultimately replace the commitment of the GBP300 million
facility agreed in May 2019.
The recapitalisation proposal is subject to certain conditions
including performance conditions, due diligence, further
discussions and reaching agreement with a range of company
stakeholders (including the pension trustees, bondholders, other
financial creditors and Fosun's shareholder approval), and receipt
of any regulatory and anti-trust clearances or approvals.
The Group has also engaged in constructive discussions with
bonding providers, and other critical financing partners to enable
it to operate its business as usual through to the completion of
the recapitalisation.
Peter Fankhauser, Chief Executive of Thomas Cook commented:
"After evaluating a broad range of options to reduce our debt
and to put our finances onto a more sustainable footing, the Board
has decided to move forward with a plan to recapitalise the
business, supported by a substantial injection of new money from
our long-standing shareholder, Fosun, and our core lending
banks.
"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."
Current trading and outlook
The Summer 2019 programme is 75% sold, slightly ahead of the
same period last year. Group Tour Operator bookings are down 9%,
largely consistent with reductions in risk capacity to help support
pricing, which is up 2%. While bookings in recent weeks have seen a
marked improvement, reflecting the annualisation of the Summer 2018
heatwave, margins remain weak due to continued intense competition
with high levels of promotional activity across all businesses.
Group Airline bookings are down 3% overall, with pricing up 2%.
Excluding capacity reductions to the in-house tour operator, Group
Airline bookings are up 11% reflecting higher sales to third-party
tour operators, particularly in Germany, and seat only in all
markets.
Looking forward, it is clear that the trends experienced in the
first half of the year have continued into the second half,
reflecting an uncertain consumer environment particularly in the
UK, leading to intense competition. As a result, the Group expects
underlying EBIT in the second half to be behind the same period
last year.
The Group is helping to mitigate these challenges with a
rigorous focus on cost, while remaining fully focused on delivering
a stronger holiday offering to customers through high quality,
higher-margin hotels, underpinned by a digital focus and
market-leading innovation.
Forthcoming results dates
All future reporting dates, as previously disclosed, are now
under review pending the outcome of the recapitalisation of the
Group. As a result, the third quarter trading update originally
scheduled for 18 July 2019 is cancelled.
Enquiries
Tej Randhawa, Thomas Cook
Analysts & Investors: Group +44 (0) 20 7557 6487
Alex Bird, Thomas Cook Group +44 (0) 20 7294 7023
Matthew Magee, Thomas Cook
Media: Group +44 (0) 20 7294 7059
Chris Alfred, Thomas Cook
Group +44 (0) 20 7294 7203
Nigel Fairbrass, Eterna Partners +44 (0) 7799 894 265
Michael Baker, Eterna Partners +44 (0) 7782 398 418
This announcement contains forward-looking statements in respect
of the Group and its recapitalisation plan. By their nature, these
statements involve uncertainty, known and unknown risks and other
facts and therefore assurance cannot be given that any particular
expectation will be met. In particular, while the Company continues
to work towards the implementation of the recapitalisation plan,
there can be no assurance that the recapitalisation plan will be
implemented unless and until agreements have been reached with
several parties and until all conditions are satisfied.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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