Thomas Cook’s share price plunged more than 15 per cent in early morning trading after it confirmed lenders are demanding an extra £200m as part of efforts to rescue the world’s oldest holiday company.
The embattled travel operator said today that investors want £200m to finalise a restructuring strategy, coming on top of a further £900m recapitalisation deal made last month.
Thomas Cook is looking at its assets as it attempts to stave off demise, reports said last night, after lenders demanded significant contingency funding.
The troubled business is hoping to reach a rescue deal led by China’s Fosun this week, as it rushes to find extra money to plug the current financial hole.
Thomas Cook said: “The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery.”
A collapse of the firm has sparked fears of the the biggest ever UK peacetime repatriation, with roughly 150,000 people currently on holidays overseas with the company.
“The Thomas Cook funding crisis, like Brexit, seems to be never ending,” said David Madden, market analyst at CMC Markets.
He added: “The travel group is at risk of collapsing if it doesn’t receive the financing, but traders are worried this £200m might not be the last funding request.”
Alex Brignall, travel and leisure analyst at City equities broker Redburn, said: “The concerning thing is that September should be the best point of the year for the cash balance, so for banks to be demanding a cash top-up now suggests demand has taken a big hit from all the negative publicity and that the company is facing additional working capital stress.”
Sky News has been told by insiders that “every possible option” is on the table as they look to salvage some 20,000 jobs.
The 178-year-old holiday giant has been holding emergency talks about a deal to hive off its Nordic airline and tour operating business units, according to the broadcaster.
It needs to find an additional £200m after lending banks – including RBS and Lloyds – demanded contingency funds for the upcoming winter season in which business is flat and cash is low for holiday companies.
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Thomas Cook reported a £1.5bn half-year loss in May and has been battling to slash a £1.4bn debt pile.
However, it has struggled in the face of economic uncertainty over Brexit, rising prices of jet fuel and hotels pushing up their costs in recent years.
The firm also ran into trouble last year as a Europe-wide heatwave encouraged holidaymakers to stay at home rather than booking a package deal abroad.