Thomas Cook Group Plc fell the most in a month after the debt-laden travel giant said it needs more than $1 billion for a recapitalisation meant to tide it through the winter, when fewer Europeans go on vacation.
The UK tour operator has made “significant progress” toward finalising a bailout including an added £150 million (€162 million) from bondholders, it said in a statement Monday. That would be on top of a £750 million package agreed with Cook’s main lending banks and Chinese investor Fosun.
The funds “will provide further liquidity headroom through the coming 2019/20 winter cash low period and ensure the business can continue to invest in its strategy,” London-based Thomas Cook said.
The 178-year-old holiday firm turned to a debt-for-equity swap as it grapples with a long-term decline in the popularity of package holidays in Europe that has stoked borrowings and shrunk margins. Thomas Cook had almost £2 billion of debt at the end of March.
The shares fell as much as 36 per cent, the most since July 12th, and were trading 16 per cent lower at 8.1 pence as of 9.54am in London. The price is down by three-quarters this year, valuing the company at £120 million.
Thomas Cook's €750 million of bonds due June 2022 dropped 3 cents on the euro to 24 cents, according to data compiled by Bloomberg.
The company reiterated that its refinancing, expected to be in place in early October, will require a reorganization of the ownership of its tour operator and airline businesses as bank and bond debt is converted into equity, significantly diluting current shareholdings. – Bloomberg